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Why Prudential (PRU) is a Great Dividend Stock Right Now
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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. 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
Based in Newark, Prudential (PRU - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -11.68%. The financial services company is paying out a dividend of $1.25 per share at the moment, with a dividend yield of 5.69% compared to the Insurance - Multi line industry's yield of 2.26% and the S&P 500's yield of 1.66%.
Looking at dividend growth, the company's current annualized dividend of $5 is up 4.2% from last year. Over the last 5 years, Prudential has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.97%. 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, Prudential's payout ratio is 56%, which means it paid out 56% 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 $11.93 per share, with earnings expected to increase 26.11% 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. But, not every company offers 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, 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 Great Dividend Stock Right Now
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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
Based in Newark, Prudential (PRU - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -11.68%. The financial services company is paying out a dividend of $1.25 per share at the moment, with a dividend yield of 5.69% compared to the Insurance - Multi line industry's yield of 2.26% and the S&P 500's yield of 1.66%.
Looking at dividend growth, the company's current annualized dividend of $5 is up 4.2% from last year. Over the last 5 years, Prudential has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.97%. 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, Prudential's payout ratio is 56%, which means it paid out 56% 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 $11.93 per share, with earnings expected to increase 26.11% 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. But, not every company offers 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, 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).