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This is Why MDU Resources (MDU) is a Great Dividend Stock
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.
MDU Resources in Focus
Headquartered in Bismarck, MDU Resources (MDU - Free Report) is a Utilities stock that has seen a price change of 19.67% so far this year. Currently paying a dividend of $0.21 per share, the company has a dividend yield of 2.7%. In comparison, the Utility - Gas Distribution industry's yield is 2.94%, while the S&P 500's yield is 1.39%.
In terms of dividend growth, the company's current annualized dividend of $0.85 is up 1.8% from last year. In the past five-year period, MDU Resources has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.57%. 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, MDU Resources's payout ratio is 44%, which means it paid out 44% of its trailing 12-month EPS as dividend.
MDU is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $2.05 per share, which represents a year-over-year growth rate of 5.13%.
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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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 MDU is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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This is Why MDU Resources (MDU) is a Great Dividend Stock
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.
MDU Resources in Focus
Headquartered in Bismarck, MDU Resources (MDU - Free Report) is a Utilities stock that has seen a price change of 19.67% so far this year. Currently paying a dividend of $0.21 per share, the company has a dividend yield of 2.7%. In comparison, the Utility - Gas Distribution industry's yield is 2.94%, while the S&P 500's yield is 1.39%.
In terms of dividend growth, the company's current annualized dividend of $0.85 is up 1.8% from last year. In the past five-year period, MDU Resources has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.57%. 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, MDU Resources's payout ratio is 44%, which means it paid out 44% of its trailing 12-month EPS as dividend.
MDU is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $2.05 per share, which represents a year-over-year growth rate of 5.13%.
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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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 MDU is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).