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Why Conagra Brands (CAG) is a Great Dividend Stock Right Now
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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.
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.
Conagra Brands in Focus
Headquartered in Chicago, Conagra Brands (CAG - Free Report) is a Consumer Staples stock that has seen a price change of 11.3% so far this year. The company is currently shelling out a dividend of $0.33 per share, with a dividend yield of 3.47%. This compares to the Food - Miscellaneous industry's yield of 0.12% and the S&P 500's yield of 1.68%.
Looking at dividend growth, the company's current annualized dividend of $1.32 is up 5.6% from last year. Over the last 5 years, Conagra Brands has increased its dividend 2 times on a year-over-year basis for an average annual increase of 11.23%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Conagra Brands's payout ratio is 54%, which means it paid out 54% of its trailing 12-month EPS as dividend.
CAG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.44 per share, representing a year-over-year earnings growth rate of 3.39%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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 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 CAG 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 Conagra Brands (CAG) is a Great Dividend Stock Right Now
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.
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.
Conagra Brands in Focus
Headquartered in Chicago, Conagra Brands (CAG - Free Report) is a Consumer Staples stock that has seen a price change of 11.3% so far this year. The company is currently shelling out a dividend of $0.33 per share, with a dividend yield of 3.47%. This compares to the Food - Miscellaneous industry's yield of 0.12% and the S&P 500's yield of 1.68%.
Looking at dividend growth, the company's current annualized dividend of $1.32 is up 5.6% from last year. Over the last 5 years, Conagra Brands has increased its dividend 2 times on a year-over-year basis for an average annual increase of 11.23%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Conagra Brands's payout ratio is 54%, which means it paid out 54% of its trailing 12-month EPS as dividend.
CAG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.44 per share, representing a year-over-year earnings growth rate of 3.39%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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 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 CAG is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).