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Why Williams-Sonoma (WSM) is a Top Dividend Stock for Your Portfolio
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Williams-Sonoma in Focus
Williams-Sonoma (WSM - Free Report) is headquartered in San Francisco, and is in the Retail-Wholesale sector. The stock has seen a price change of -16.1% since the start of the year. Currently paying a dividend of $0.71 per share, the company has a dividend yield of 2%. In comparison, the Retail - Home Furnishings industry's yield is 1.35%, while the S&P 500's yield is 1.45%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.84 is up 9.2% from last year. In the past five-year period, Williams-Sonoma has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.95%. 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. Right now, Williams-Sonoma's payout ratio is 19%, which means it paid out 19% of its trailing 12-month EPS as dividend.
WSM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $15.56 per share, with earnings expected to increase 4.78% 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. It's important to keep in mind that not all companies provide 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. That said, they can take comfort from the fact that WSM is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Why Williams-Sonoma (WSM) is a Top Dividend Stock for Your Portfolio
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Williams-Sonoma in Focus
Williams-Sonoma (WSM - Free Report) is headquartered in San Francisco, and is in the Retail-Wholesale sector. The stock has seen a price change of -16.1% since the start of the year. Currently paying a dividend of $0.71 per share, the company has a dividend yield of 2%. In comparison, the Retail - Home Furnishings industry's yield is 1.35%, while the S&P 500's yield is 1.45%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.84 is up 9.2% from last year. In the past five-year period, Williams-Sonoma has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.95%. 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. Right now, Williams-Sonoma's payout ratio is 19%, which means it paid out 19% of its trailing 12-month EPS as dividend.
WSM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $15.56 per share, with earnings expected to increase 4.78% 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. It's important to keep in mind that not all companies provide 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. That said, they can take comfort from the fact that WSM is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).