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This is Why Suncor Energy (SU) is a Great Dividend Stock
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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. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
Suncor Energy in Focus
Suncor Energy (SU - Free Report) is headquartered in Calgary, and is in the Oils-Energy sector. The stock has seen a price change of -9.45% since the start of the year. The energy company is paying out a dividend of $0.28 per share at the moment, with a dividend yield of 3.32% compared to the Oil and Gas - Integrated - Canadian industry's yield of 1.8% and the S&P 500's yield of 2%.
Looking at dividend growth, the company's current annualized dividend of $1.10 is up 11.7% from last year. In the past five-year period, Suncor Energy has increased its dividend 4 times on a year-over-year basis for an average annual increase of 5.41%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Suncor Energy's current payout ratio is 53%, meaning it paid out 53% of its trailing 12-month EPS as dividend.
SU is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $2.56 per share, which represents a year-over-year growth rate of 69.54%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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. That said, they can take comfort from the fact that SU is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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This is Why Suncor Energy (SU) is a Great Dividend Stock
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
Suncor Energy in Focus
Suncor Energy (SU - Free Report) is headquartered in Calgary, and is in the Oils-Energy sector. The stock has seen a price change of -9.45% since the start of the year. The energy company is paying out a dividend of $0.28 per share at the moment, with a dividend yield of 3.32% compared to the Oil and Gas - Integrated - Canadian industry's yield of 1.8% and the S&P 500's yield of 2%.
Looking at dividend growth, the company's current annualized dividend of $1.10 is up 11.7% from last year. In the past five-year period, Suncor Energy has increased its dividend 4 times on a year-over-year basis for an average annual increase of 5.41%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Suncor Energy's current payout ratio is 53%, meaning it paid out 53% of its trailing 12-month EPS as dividend.
SU is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $2.56 per share, which represents a year-over-year growth rate of 69.54%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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. That said, they can take comfort from the fact that SU is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).