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Why Bristol-Myers Squibb (BMY) 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. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Bristol-Myers Squibb in Focus
Based in New York, Bristol-Myers Squibb (BMY - Free Report) is in the Medical sector, and so far this year, shares have seen a price change of -20.32%. Currently paying a dividend of $0.4 per share, the company has a dividend yield of 3.28%. In comparison, the Large Cap Pharmaceuticals industry's yield is 2.62%, while the S&P 500's yield is 2%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.60 is up 2.6% from last year. In the past five-year period, Bristol-Myers Squibb has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.43%. 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. Bristol-Myers's current payout ratio is 47%. This means it paid out 47% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BMY expects solid earnings growth. The Zacks Consensus Estimate for 2018 is $3.64 per share, representing a year-over-year earnings growth rate of 20.93%.
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. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful 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 BMY is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why Bristol-Myers Squibb (BMY) 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. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Bristol-Myers Squibb in Focus
Based in New York, Bristol-Myers Squibb (BMY - Free Report) is in the Medical sector, and so far this year, shares have seen a price change of -20.32%. Currently paying a dividend of $0.4 per share, the company has a dividend yield of 3.28%. In comparison, the Large Cap Pharmaceuticals industry's yield is 2.62%, while the S&P 500's yield is 2%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.60 is up 2.6% from last year. In the past five-year period, Bristol-Myers Squibb has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.43%. 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. Bristol-Myers's current payout ratio is 47%. This means it paid out 47% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BMY expects solid earnings growth. The Zacks Consensus Estimate for 2018 is $3.64 per share, representing a year-over-year earnings growth rate of 20.93%.
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. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful 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 BMY is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).