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This is Why BASF SE (BASFY) is a Great Dividend Stock
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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 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.
BASF SE in Focus
Based in Ludwigshafen, BASF SE (BASFY - Free Report) is in the Basic Materials sector, and so far this year, shares have seen a price change of 6.22%. The company is currently shelling out a dividend of $0.71 per share, with a dividend yield of 3.39%. This compares to the Chemical - Diversified industry's yield of 1.4% and the S&P 500's yield of 1.29%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.71 is up 6.4% from last year. In the past five-year period, BASF SE has increased its dividend 3 times on a year-over-year basis for an average annual increase of 2.33%. 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. BASF SE's current payout ratio is 57%, meaning it paid out 57% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BASFY expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $1.34 per share, with earnings expected to increase 45.65% from the year ago period.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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, BASFY 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 BASF SE (BASFY) is a Great Dividend Stock
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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.
BASF SE in Focus
Based in Ludwigshafen, BASF SE (BASFY - Free Report) is in the Basic Materials sector, and so far this year, shares have seen a price change of 6.22%. The company is currently shelling out a dividend of $0.71 per share, with a dividend yield of 3.39%. This compares to the Chemical - Diversified industry's yield of 1.4% and the S&P 500's yield of 1.29%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.71 is up 6.4% from last year. In the past five-year period, BASF SE has increased its dividend 3 times on a year-over-year basis for an average annual increase of 2.33%. 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. BASF SE's current payout ratio is 57%, meaning it paid out 57% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BASFY expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $1.34 per share, with earnings expected to increase 45.65% from the year ago period.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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, BASFY 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).