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Why U.S. Bancorp (USB) is a Top Dividend Stock for Your Portfolio
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
U.S. Bancorp in Focus
Based in Minneapolis, U.S. Bancorp (USB - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 11.67%. The company is currently shelling out a dividend of $0.48 per share, with a dividend yield of 3.94%. This compares to the Banks - Major Regional industry's yield of 3.06% and the S&P 500's yield of 1.58%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.92 is up 2.1% from last year. In the past five-year period, U.S. Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 8.58%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, U.S. Bancorp's payout ratio is 43%, which means it paid out 43% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, USB expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $5.03 per share, which represents a year-over-year growth rate of 13.03%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, USB is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Why U.S. Bancorp (USB) is a Top Dividend Stock for Your Portfolio
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
U.S. Bancorp in Focus
Based in Minneapolis, U.S. Bancorp (USB - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 11.67%. The company is currently shelling out a dividend of $0.48 per share, with a dividend yield of 3.94%. This compares to the Banks - Major Regional industry's yield of 3.06% and the S&P 500's yield of 1.58%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.92 is up 2.1% from last year. In the past five-year period, U.S. Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 8.58%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, U.S. Bancorp's payout ratio is 43%, which means it paid out 43% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, USB expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $5.03 per share, which represents a year-over-year growth rate of 13.03%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, USB is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).