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Why HP (HPQ) is a Top Dividend Stock for Your Portfolio
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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. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
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 -9.56%. The personal computer and printer maker is currently shelling out a dividend of $0.25 per share, with a dividend yield of 2.94%. This compares to the Computer - Mini computers industry's yield of 1.09% and the S&P 500's yield of 1.46%.
Looking at dividend growth, the company's current annualized dividend of $1 is up 29% from last year. In the past five-year period, HP has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.02%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. HP's current payout ratio is 20%. This means 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 $4.24 per share, with earnings expected to increase 11.87% from the year ago period.
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, HPQ 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 HP (HPQ) is a Top Dividend Stock for Your Portfolio
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
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 -9.56%. The personal computer and printer maker is currently shelling out a dividend of $0.25 per share, with a dividend yield of 2.94%. This compares to the Computer - Mini computers industry's yield of 1.09% and the S&P 500's yield of 1.46%.
Looking at dividend growth, the company's current annualized dividend of $1 is up 29% from last year. In the past five-year period, HP has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.02%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. HP's current payout ratio is 20%. This means 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 $4.24 per share, with earnings expected to increase 11.87% from the year ago period.
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, HPQ 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).