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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Hillenbrand in Focus
Headquartered in Batesville, Hillenbrand (HI - Free Report) is a Consumer Staples stock that has seen a price change of -17.33% so far this year. The diversified industrial company specializing in business-to-business products is currently shelling out a dividend of $0.22 per share, with a dividend yield of 2.02%. This compares to the Funeral Services industry's yield of 1.72% and the S&P 500's yield of 1.46%.
In terms of dividend growth, the company's current annualized dividend of $0.87 is up 1.2% from last year. In the past five-year period, Hillenbrand has increased its dividend 5 times on a year-over-year basis for an average annual increase of 1.22%. 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. Hillenbrand's current payout ratio is 23%. This means it paid out 23% of its trailing 12-month EPS as dividend.
HI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $3.92 per share, representing a year-over-year earnings growth rate of 3.43%.
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. 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. That said, they can take comfort from the fact that HI is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.2% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>
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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Hillenbrand in Focus
Headquartered in Batesville, Hillenbrand (HI - Free Report) is a Consumer Staples stock that has seen a price change of -17.33% so far this year. The diversified industrial company specializing in business-to-business products is currently shelling out a dividend of $0.22 per share, with a dividend yield of 2.02%. This compares to the Funeral Services industry's yield of 1.72% and the S&P 500's yield of 1.46%.
In terms of dividend growth, the company's current annualized dividend of $0.87 is up 1.2% from last year. In the past five-year period, Hillenbrand has increased its dividend 5 times on a year-over-year basis for an average annual increase of 1.22%. 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. Hillenbrand's current payout ratio is 23%. This means it paid out 23% of its trailing 12-month EPS as dividend.
HI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $3.92 per share, representing a year-over-year earnings growth rate of 3.43%.
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. 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. That said, they can take comfort from the fact that HI is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.2% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>
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