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Why Mondelez (MDLZ) is a Great Dividend Stock Right Now
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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. 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 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.
Mondelez in Focus
Based in Deerfield, Mondelez (MDLZ - Free Report) is in the Consumer Staples sector, and so far this year, shares have seen a price change of 0.91%. The maker of Oreo cookies, Cadbury chocolate and Trident gum is paying out a dividend of $0.28 per share at the moment, with a dividend yield of 2.05% compared to the Food - Miscellaneous industry's yield of 0.33% and the S&P 500's yield of 1.76%.
In terms of dividend growth, the company's current annualized dividend of $1.14 is up 4.6% from last year. Over the last 5 years, Mondelez has increased its dividend 5 times on a year-over-year basis for an average annual increase of 13.84%. 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. Mondelez's current payout ratio is 44%, meaning it paid out 44% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, MDLZ expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $2.61 per share, with earnings expected to increase 5.67% 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. But, not every company offers 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. With that in mind, MDLZ 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 Mondelez (MDLZ) is a Great Dividend Stock Right Now
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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.
Mondelez in Focus
Based in Deerfield, Mondelez (MDLZ - Free Report) is in the Consumer Staples sector, and so far this year, shares have seen a price change of 0.91%. The maker of Oreo cookies, Cadbury chocolate and Trident gum is paying out a dividend of $0.28 per share at the moment, with a dividend yield of 2.05% compared to the Food - Miscellaneous industry's yield of 0.33% and the S&P 500's yield of 1.76%.
In terms of dividend growth, the company's current annualized dividend of $1.14 is up 4.6% from last year. Over the last 5 years, Mondelez has increased its dividend 5 times on a year-over-year basis for an average annual increase of 13.84%. 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. Mondelez's current payout ratio is 44%, meaning it paid out 44% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, MDLZ expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $2.61 per share, with earnings expected to increase 5.67% 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. But, not every company offers 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. With that in mind, MDLZ 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).