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Why Huntington Ingalls (HII) is a Great Dividend Stock Right Now
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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. 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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Huntington Ingalls in Focus
Headquartered in Newport News, Huntington Ingalls (HII - Free Report) is an Aerospace stock that has seen a price change of 29.1% so far this year. The shipbuilder is paying out a dividend of $1.14 per share at the moment, with a dividend yield of 2.07% compared to the Aerospace - Defense industry's yield of 0.12% and the S&P 500's yield of 1.29%.
Looking at dividend growth, the company's current annualized dividend of $4.56 is up 7.8% from last year. Huntington Ingalls has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 19.22%. 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. Huntington Ingalls's current payout ratio is 31%. This means it paid out 31% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HII for this fiscal year. The Zacks Consensus Estimate for 2021 is $12.90 per share, which represents a year-over-year growth rate of 29%.
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. However, not all companies offer 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, HII 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 Huntington Ingalls (HII) 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. 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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Huntington Ingalls in Focus
Headquartered in Newport News, Huntington Ingalls (HII - Free Report) is an Aerospace stock that has seen a price change of 29.1% so far this year. The shipbuilder is paying out a dividend of $1.14 per share at the moment, with a dividend yield of 2.07% compared to the Aerospace - Defense industry's yield of 0.12% and the S&P 500's yield of 1.29%.
Looking at dividend growth, the company's current annualized dividend of $4.56 is up 7.8% from last year. Huntington Ingalls has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 19.22%. 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. Huntington Ingalls's current payout ratio is 31%. This means it paid out 31% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HII for this fiscal year. The Zacks Consensus Estimate for 2021 is $12.90 per share, which represents a year-over-year growth rate of 29%.
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. However, not all companies offer 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, HII 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).