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Why Sonoco (SON) is a Top Dividend Stock for Your Portfolio
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
Sonoco in Focus
Headquartered in Hartsville, Sonoco (SON - Free Report) is an Industrial Products stock that has seen a price change of 14.26% so far this year. Currently paying a dividend of $0.9 per share, the company has a dividend yield of 2.66%. In comparison, the Containers - Paper and Packaging industry's yield is 1.73%, while the S&P 500's yield is 1.3%.
In terms of dividend growth, the company's current annualized dividend of $1.80 is up 4.7% from last year. In the past five-year period, Sonoco has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.18%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Sonoco's payout ratio is 53%, which means it paid out 53% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for SON for this fiscal year. The Zacks Consensus Estimate for 2021 is $3.57 per share, which represents a year-over-year growth rate of 4.69%.
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. 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, SON 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 Sonoco (SON) is a Top Dividend Stock for Your Portfolio
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
Sonoco in Focus
Headquartered in Hartsville, Sonoco (SON - Free Report) is an Industrial Products stock that has seen a price change of 14.26% so far this year. Currently paying a dividend of $0.9 per share, the company has a dividend yield of 2.66%. In comparison, the Containers - Paper and Packaging industry's yield is 1.73%, while the S&P 500's yield is 1.3%.
In terms of dividend growth, the company's current annualized dividend of $1.80 is up 4.7% from last year. In the past five-year period, Sonoco has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.18%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Sonoco's payout ratio is 53%, which means it paid out 53% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for SON for this fiscal year. The Zacks Consensus Estimate for 2021 is $3.57 per share, which represents a year-over-year growth rate of 4.69%.
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. 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, SON 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).