Back to top

Image: Bigstock

Luxfer (LXFR) is a Top Dividend Stock Right Now: Should You Buy?

Read MoreHide Full Article

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.

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.

Luxfer in Focus

Luxfer (LXFR - Free Report) is headquartered in Manchester, and is in the Industrial Products sector. The stock has seen a price change of -20.2% since the start of the year. The materials technology company specializing in aluminum, magnesium and zirconium is currently shelling out a dividend of $0.13 per share, with a dividend yield of 3.37%. This compares to the Manufacturing - General Industrial industry's yield of 0.35% and the S&P 500's yield of 1.56%.

Looking at dividend growth, the company's current annualized dividend of $0.52 is up 4% from last year. Over the last 5 years, Luxfer has increased its dividend 2 times on a year-over-year basis for an average annual increase of 7.13%. 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. Luxfer's current payout ratio is 43%. This means it paid out 43% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, LXFR expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $1.44 per share, with earnings expected to increase 11.63% 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, LXFR presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Luxfer Holdings PLC (LXFR) - free report >>

Published in