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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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
MDU Resources in Focus
Based in Bismarck, MDU Resources (MDU - Free Report) is in the Utilities sector, and so far this year, shares have seen a price change of 27.79%. The energy, mining, construction and utilities company is currently shelling out a dividend of $0.21 per share, with a dividend yield of 2.53%. This compares to the Utility - Gas Distribution industry's yield of 2.77% and the S&P 500's yield of 1.29%.
In terms of dividend growth, the company's current annualized dividend of $0.85 is up 1.8% from last year. MDU Resources has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 2.59%. 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. Right now, MDU Resources's payout ratio is 41%, which means it paid out 41% 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 $2.08 per share, representing a year-over-year earnings growth rate of 6.67%.
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. 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. 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, MDU 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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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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
MDU Resources in Focus
Based in Bismarck, MDU Resources (MDU - Free Report) is in the Utilities sector, and so far this year, shares have seen a price change of 27.79%. The energy, mining, construction and utilities company is currently shelling out a dividend of $0.21 per share, with a dividend yield of 2.53%. This compares to the Utility - Gas Distribution industry's yield of 2.77% and the S&P 500's yield of 1.29%.
In terms of dividend growth, the company's current annualized dividend of $0.85 is up 1.8% from last year. MDU Resources has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 2.59%. 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. Right now, MDU Resources's payout ratio is 41%, which means it paid out 41% 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 $2.08 per share, representing a year-over-year earnings growth rate of 6.67%.
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. 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. 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, MDU 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).