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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.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
HP in Focus
Headquartered in Palo Alto, HP (HPQ - Free Report) is a Computer and Technology stock that has seen a price change of 44.65% so far this year. Currently paying a dividend of $0.19 per share, the company has a dividend yield of 2.18%. In comparison, the Computer - Mini computers industry's yield is 0.86%, while the S&P 500's yield is 1.26%.
In terms of dividend growth, the company's current annualized dividend of $0.78 is up 10.6% from last year. In the past five-year period, HP has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.66%. 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. HP's current payout ratio is 31%, meaning it paid out 31% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, HPQ expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $3.34 per share, representing a year-over-year earnings growth rate of 46.49%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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. 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 HPQ is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why HP (HPQ) 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.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
HP in Focus
Headquartered in Palo Alto, HP (HPQ - Free Report) is a Computer and Technology stock that has seen a price change of 44.65% so far this year. Currently paying a dividend of $0.19 per share, the company has a dividend yield of 2.18%. In comparison, the Computer - Mini computers industry's yield is 0.86%, while the S&P 500's yield is 1.26%.
In terms of dividend growth, the company's current annualized dividend of $0.78 is up 10.6% from last year. In the past five-year period, HP has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.66%. 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. HP's current payout ratio is 31%, meaning it paid out 31% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, HPQ expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $3.34 per share, representing a year-over-year earnings growth rate of 46.49%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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. 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 HPQ is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).