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Why Prudential (PRU) is a Top Dividend Stock for Your Portfolio
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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 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.
Prudential in Focus
Prudential (PRU - Free Report) is headquartered in Newark, and is in the Finance sector. The stock has seen a price change of -22.35% since the start of the year. Currently paying a dividend of $1.25 per share, the company has a dividend yield of 6.47%. In comparison, the Insurance - Multi line industry's yield is 2.36%, while the S&P 500's yield is 1.81%.
Taking a look at the company's dividend growth, its current annualized dividend of $5 is up 4.2% from last year. Prudential has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 7.12%. 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. Prudential's current payout ratio is 51%, meaning it paid out 51% of its trailing 12-month EPS as dividend.
PRU is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $12.20 per share, representing a year-over-year earnings growth rate of 28.96%.
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. However, not all companies offer a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PRU 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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Why Prudential (PRU) 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Prudential in Focus
Prudential (PRU - Free Report) is headquartered in Newark, and is in the Finance sector. The stock has seen a price change of -22.35% since the start of the year. Currently paying a dividend of $1.25 per share, the company has a dividend yield of 6.47%. In comparison, the Insurance - Multi line industry's yield is 2.36%, while the S&P 500's yield is 1.81%.
Taking a look at the company's dividend growth, its current annualized dividend of $5 is up 4.2% from last year. Prudential has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 7.12%. 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. Prudential's current payout ratio is 51%, meaning it paid out 51% of its trailing 12-month EPS as dividend.
PRU is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $12.20 per share, representing a year-over-year earnings growth rate of 28.96%.
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. However, not all companies offer a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PRU 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).