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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. 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 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.
Snap-On in Focus
Based in Kenosha, Snap-On (SNA - Free Report) is in the Consumer Discretionary sector, and so far this year, shares have seen a price change of 2.23%. The tool and diagnostic equipment maker is paying out a dividend of $1.42 per share at the moment, with a dividend yield of 2.58% compared to the Tools - Handheld industry's yield of 0.24% and the S&P 500's yield of 1.55%.
Looking at dividend growth, the company's current annualized dividend of $5.68 is up 11.2% from last year. Snap-On has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 15%. 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, Snap-On's payout ratio is 37%, which means it paid out 37% of its trailing 12-month EPS as dividend.
SNA is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $15.74 per share, with earnings expected to increase 5.50% 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. 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. With that in mind, SNA 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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Are You Looking for a High-Growth Dividend Stock?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.
Snap-On in Focus
Based in Kenosha, Snap-On (SNA - Free Report) is in the Consumer Discretionary sector, and so far this year, shares have seen a price change of 2.23%. The tool and diagnostic equipment maker is paying out a dividend of $1.42 per share at the moment, with a dividend yield of 2.58% compared to the Tools - Handheld industry's yield of 0.24% and the S&P 500's yield of 1.55%.
Looking at dividend growth, the company's current annualized dividend of $5.68 is up 11.2% from last year. Snap-On has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 15%. 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, Snap-On's payout ratio is 37%, which means it paid out 37% of its trailing 12-month EPS as dividend.
SNA is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $15.74 per share, with earnings expected to increase 5.50% 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. 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. With that in mind, SNA 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).