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Cabot (CBT) is a Top Dividend Stock Right Now: Should You Buy?
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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. 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.
Cabot in Focus
Based in Boston, Cabot (CBT - Free Report) is in the Basic Materials sector, and so far this year, shares have seen a price change of 29.56%. Currently paying a dividend of $0.37 per share, the company has a dividend yield of 2.03%. In comparison, the Chemical - Diversified industry's yield is 1.6%, while the S&P 500's yield is 1.63%.
In terms of dividend growth, the company's current annualized dividend of $1.48 is up 5.7% from last year. Cabot has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 3.25%. 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. Cabot's current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.
CBT is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $6.10 per share, with earnings expected to increase 21.51% 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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that CBT 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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Cabot (CBT) is a Top Dividend Stock Right Now: Should You Buy?
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.
Cabot in Focus
Based in Boston, Cabot (CBT - Free Report) is in the Basic Materials sector, and so far this year, shares have seen a price change of 29.56%. Currently paying a dividend of $0.37 per share, the company has a dividend yield of 2.03%. In comparison, the Chemical - Diversified industry's yield is 1.6%, while the S&P 500's yield is 1.63%.
In terms of dividend growth, the company's current annualized dividend of $1.48 is up 5.7% from last year. Cabot has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 3.25%. 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. Cabot's current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.
CBT is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $6.10 per share, with earnings expected to increase 21.51% 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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that CBT is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).