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Why Kaiser Aluminum (KALU) is a Top Dividend Stock for Your Portfolio
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.
Kaiser Aluminum in Focus
Kaiser Aluminum (KALU - Free Report) is headquartered in Foothill Ranch, and is in the Industrial Products sector. The stock has seen a price change of 7.68% since the start of the year. The aluminum products company is currently shelling out a dividend of $0.6 per share, with a dividend yield of 2.5%. This compares to the Metal Products - Procurement and Fabrication industry's yield of 0.82% and the S&P 500's yield of 1.87%.
Looking at dividend growth, the company's current annualized dividend of $2.40 is up 9.1% from last year. Over the last 5 years, Kaiser Aluminum has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.56%. 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. Kaiser's current payout ratio is 36%, meaning it paid out 36% of its trailing 12-month EPS as dividend.
KALU is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $7.14 per share, with earnings expected to increase 10.36% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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, KALU 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 Kaiser Aluminum (KALU) is a Top Dividend Stock for Your Portfolio
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.
Kaiser Aluminum in Focus
Kaiser Aluminum (KALU - Free Report) is headquartered in Foothill Ranch, and is in the Industrial Products sector. The stock has seen a price change of 7.68% since the start of the year. The aluminum products company is currently shelling out a dividend of $0.6 per share, with a dividend yield of 2.5%. This compares to the Metal Products - Procurement and Fabrication industry's yield of 0.82% and the S&P 500's yield of 1.87%.
Looking at dividend growth, the company's current annualized dividend of $2.40 is up 9.1% from last year. Over the last 5 years, Kaiser Aluminum has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.56%. 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. Kaiser's current payout ratio is 36%, meaning it paid out 36% of its trailing 12-month EPS as dividend.
KALU is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $7.14 per share, with earnings expected to increase 10.36% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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, KALU 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).