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Why PetroChina (PTR) 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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

PetroChina in Focus

Based in Beijing, PetroChina (PTR - Free Report) is in the Oils-Energy sector, and so far this year, shares have seen a price change of 69.43%. Currently paying a dividend of $1.79 per share, the company has a dividend yield of 6.87%. In comparison, the Oil and Gas - Integrated - International industry's yield is 2.99%, while the S&P 500's yield is 1.39%.

In terms of dividend growth, the company's current annualized dividend of $3.58 is up 84.9% from last year. In the past five-year period, PetroChina has increased its dividend 5 times on a year-over-year basis for an average annual increase of 31%. 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. PetroChina's current payout ratio is 29%. This means it paid out 29% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for PTR for this fiscal year. The Zacks Consensus Estimate for 2021 is $7.03 per share, with earnings expected to increase 384.83% 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that PTR is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).


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