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Huntsman (HUN) is a Top Dividend Stock Right Now: Should You Buy?

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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 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.

Huntsman in Focus

Headquartered in The Woodlands, Huntsman (HUN - Free Report) is a Basic Materials stock that has seen a price change of -14.22% so far this year. The chemical company is currently shelling out a dividend of $0.21 per share, with a dividend yield of 2.84%. This compares to the Chemical - Diversified industry's yield of 2.16% and the S&P 500's yield of 1.71%.

Looking at dividend growth, the company's current annualized dividend of $0.85 is up 17.2% from last year. Huntsman has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 7.71%. 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, Huntsman's payout ratio is 21%, which means it paid out 21% of its trailing 12-month EPS as dividend.

HUN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $4.43 per share, with earnings expected to increase 25.14% 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.

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. With that in mind, HUN 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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