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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.
HP in Focus
Based in Palo Alto, HP (HPQ - Free Report) is in the Computer and Technology sector, and so far this year, shares have seen a price change of -6.53%. The personal computer and printer maker is currently shelling out a dividend of $0.25 per share, with a dividend yield of 2.84%. This compares to the Computer - Mini computers industry's yield of 1.12% and the S&P 500's yield of 1.42%.
Taking a look at the company's dividend growth, its current annualized dividend of $1 is up 29% from last year. Over the last 5 years, HP has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.20%. 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. HP's current payout ratio is 20%, meaning it paid out 20% of its trailing 12-month EPS as dividend.
HPQ is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $4.16 per share, with earnings expected to increase 9.76% 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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that HPQ is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why HP (HPQ) 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.
HP in Focus
Based in Palo Alto, HP (HPQ - Free Report) is in the Computer and Technology sector, and so far this year, shares have seen a price change of -6.53%. The personal computer and printer maker is currently shelling out a dividend of $0.25 per share, with a dividend yield of 2.84%. This compares to the Computer - Mini computers industry's yield of 1.12% and the S&P 500's yield of 1.42%.
Taking a look at the company's dividend growth, its current annualized dividend of $1 is up 29% from last year. Over the last 5 years, HP has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.20%. 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. HP's current payout ratio is 20%, meaning it paid out 20% of its trailing 12-month EPS as dividend.
HPQ is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $4.16 per share, with earnings expected to increase 9.76% 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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that HPQ is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).