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Packaging Corp. (PKG) is a Top Dividend Stock Right Now: Should You Buy?
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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 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.
Packaging Corp. In Focus
Headquartered in Lake Forest, Packaging Corp. (PKG - Free Report) is an Industrial Products stock that has seen a price change of 2.39% so far this year. Currently paying a dividend of $1 per share, the company has a dividend yield of 2.83%. In comparison, the Containers - Paper and Packaging industry's yield is 2.01%, while the S&P 500's yield is 1.4%.
In terms of dividend growth, the company's current annualized dividend of $4 is up 18.7% from last year. Packaging Corp. has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 10.80%. 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. Right now, Packaging Corp.'s payout ratio is 58%, which means it paid out 58% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PKG expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $8.50 per share, with earnings expected to increase 47.06% from the year ago period.
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.
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PKG 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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Packaging Corp. (PKG) is a Top Dividend Stock Right Now: Should You Buy?
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 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.
Packaging Corp. In Focus
Headquartered in Lake Forest, Packaging Corp. (PKG - Free Report) is an Industrial Products stock that has seen a price change of 2.39% so far this year. Currently paying a dividend of $1 per share, the company has a dividend yield of 2.83%. In comparison, the Containers - Paper and Packaging industry's yield is 2.01%, while the S&P 500's yield is 1.4%.
In terms of dividend growth, the company's current annualized dividend of $4 is up 18.7% from last year. Packaging Corp. has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 10.80%. 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. Right now, Packaging Corp.'s payout ratio is 58%, which means it paid out 58% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PKG expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $8.50 per share, with earnings expected to increase 47.06% from the year ago period.
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.
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PKG 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).