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Why Spartan Stores (SPTN) is a Top Dividend Stock for Your Portfolio
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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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Spartan Stores in Focus
Headquartered in Grand Rapids, Spartan Stores (SPTN - Free Report) is a Retail-Wholesale stock that has seen a price change of 29.74% so far this year. Currently paying a dividend of $0.21 per share, the company has a dividend yield of 2.51%. In comparison, the Food - Natural Foods Products industry's yield is 1.25%, while the S&P 500's yield is 1.78%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.84 is up 5% from last year. In the past five-year period, Spartan Stores has increased its dividend 5 times on a year-over-year basis for an average annual increase of 3.98%. 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. Spartan Stores's current payout ratio is 40%, meaning it paid out 40% of its trailing 12-month EPS as dividend.
SPTN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.31 per share, representing a year-over-year earnings growth rate of 35.88%.
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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that SPTN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why Spartan Stores (SPTN) is a Top Dividend Stock for Your Portfolio
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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Spartan Stores in Focus
Headquartered in Grand Rapids, Spartan Stores (SPTN - Free Report) is a Retail-Wholesale stock that has seen a price change of 29.74% so far this year. Currently paying a dividend of $0.21 per share, the company has a dividend yield of 2.51%. In comparison, the Food - Natural Foods Products industry's yield is 1.25%, while the S&P 500's yield is 1.78%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.84 is up 5% from last year. In the past five-year period, Spartan Stores has increased its dividend 5 times on a year-over-year basis for an average annual increase of 3.98%. 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. Spartan Stores's current payout ratio is 40%, meaning it paid out 40% of its trailing 12-month EPS as dividend.
SPTN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.31 per share, representing a year-over-year earnings growth rate of 35.88%.
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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that SPTN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).