Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Procter & Gamble in Focus
Procter & Gamble (PG - Free Report) is headquartered in Cincinnati, and is in the Consumer Staples sector. The stock has seen a price change of 10.98% since the start of the year. Currently paying a dividend of $0.79 per share, the company has a dividend yield of 2.28%. In comparison, the Soap and Cleaning Materials industry's yield is 2.07%, while the S&P 500's yield is 1.48%.
In terms of dividend growth, the company's current annualized dividend of $3.16 is up 4.4% from last year. In the past five-year period, Procter & Gamble has increased its dividend 5 times on a year-over-year basis for an average annual increase of 3.73%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, P&G's payout ratio is 59%, which means it paid out 59% of its trailing 12-month EPS as dividend.
PG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $5.55 per share, which represents a year-over-year growth rate of 8.40%.
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 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 PG is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Procter & Gamble in Focus
Procter & Gamble (PG - Free Report) is headquartered in Cincinnati, and is in the Consumer Staples sector. The stock has seen a price change of 10.98% since the start of the year. Currently paying a dividend of $0.79 per share, the company has a dividend yield of 2.28%. In comparison, the Soap and Cleaning Materials industry's yield is 2.07%, while the S&P 500's yield is 1.48%.
In terms of dividend growth, the company's current annualized dividend of $3.16 is up 4.4% from last year. In the past five-year period, Procter & Gamble has increased its dividend 5 times on a year-over-year basis for an average annual increase of 3.73%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, P&G's payout ratio is 59%, which means it paid out 59% of its trailing 12-month EPS as dividend.
PG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $5.55 per share, which represents a year-over-year growth rate of 8.40%.
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 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 PG is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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