All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
IdaCorp in Focus
Headquartered in Boise, IdaCorp (IDA - Free Report) is a Utilities stock that has seen a price change of 7.24% so far this year. Currently paying a dividend of $0.71 per share, the company has a dividend yield of 2.76%. In comparison, the Utility - Electric Power industry's yield is 3.3%, while the S&P 500's yield is 1.45%.
Looking at dividend growth, the company's current annualized dividend of $2.84 is up 4.4% from last year. Over the last 5 years, IdaCorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.76%. 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, IdaCorp's payout ratio is 56%, which means it paid out 56% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, IDA expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $4.85 per share, representing a year-over-year earnings growth rate of 3.41%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, IDA 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).
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How To Profit From Trillions On Spending For Infrastructure >>
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
IdaCorp in Focus
Headquartered in Boise, IdaCorp (IDA - Free Report) is a Utilities stock that has seen a price change of 7.24% so far this year. Currently paying a dividend of $0.71 per share, the company has a dividend yield of 2.76%. In comparison, the Utility - Electric Power industry's yield is 3.3%, while the S&P 500's yield is 1.45%.
Looking at dividend growth, the company's current annualized dividend of $2.84 is up 4.4% from last year. Over the last 5 years, IdaCorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.76%. 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, IdaCorp's payout ratio is 56%, which means it paid out 56% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, IDA expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $4.85 per share, representing a year-over-year earnings growth rate of 3.41%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, IDA 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).
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How To Profit From Trillions On Spending For Infrastructure >>
Get the latest research report on IDA - FREE