We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Eaton (ETN) is a Top Dividend Stock for Your Portfolio
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. 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 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.
Eaton in Focus
Headquartered in Dublin, Eaton (ETN - Free Report) is an Industrial Products stock that has seen a price change of -20.83% so far this year. The power management company is paying out a dividend of $0.81 per share at the moment, with a dividend yield of 2.37% compared to the Manufacturing - Electronics industry's yield of 1% and the S&P 500's yield of 1.81%.
In terms of dividend growth, the company's current annualized dividend of $3.24 is up 6.6% from last year. Over the last 5 years, Eaton has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.23%. 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, Eaton's payout ratio is 47%, which means it paid out 47% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, ETN expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $7.55 per share, with earnings expected to increase 14.05% 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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ETN 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).
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Eaton (ETN) is a Top Dividend Stock for Your Portfolio
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 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.
Eaton in Focus
Headquartered in Dublin, Eaton (ETN - Free Report) is an Industrial Products stock that has seen a price change of -20.83% so far this year. The power management company is paying out a dividend of $0.81 per share at the moment, with a dividend yield of 2.37% compared to the Manufacturing - Electronics industry's yield of 1% and the S&P 500's yield of 1.81%.
In terms of dividend growth, the company's current annualized dividend of $3.24 is up 6.6% from last year. Over the last 5 years, Eaton has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.23%. 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, Eaton's payout ratio is 47%, which means it paid out 47% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, ETN expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $7.55 per share, with earnings expected to increase 14.05% 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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ETN 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).