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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. But 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Norfolk Southern in Focus
Based in Atlanta, Norfolk Southern (NSC - Free Report) is in the Transportation sector, and so far this year, shares have seen a price change of -23.45%. The railroad is paying out a dividend of $1.24 per share at the moment, with a dividend yield of 2.18% compared to the Transportation - Rail industry's yield of 1.38% and the S&P 500's yield of 1.73%.
Taking a look at the company's dividend growth, its current annualized dividend of $4.96 is up 19.2% from last year. Norfolk Southern has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 13.63%. 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. Norfolk Southern's current payout ratio is 40%. This means it paid out 40% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, NSC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $13.80 per share, representing a year-over-year earnings growth rate of 13.96%.
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. But, not every company offers 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, NSC 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?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Norfolk Southern in Focus
Based in Atlanta, Norfolk Southern (NSC - Free Report) is in the Transportation sector, and so far this year, shares have seen a price change of -23.45%. The railroad is paying out a dividend of $1.24 per share at the moment, with a dividend yield of 2.18% compared to the Transportation - Rail industry's yield of 1.38% and the S&P 500's yield of 1.73%.
Taking a look at the company's dividend growth, its current annualized dividend of $4.96 is up 19.2% from last year. Norfolk Southern has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 13.63%. 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. Norfolk Southern's current payout ratio is 40%. This means it paid out 40% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, NSC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $13.80 per share, representing a year-over-year earnings growth rate of 13.96%.
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. But, not every company offers 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, NSC 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).