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Why Honeywell International Inc. (HON) is a Top Dividend Stock for Your Portfolio
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Honeywell International Inc. In Focus
Headquartered in Charlotte, Honeywell International Inc. (HON - Free Report) is a Conglomerates stock that has seen a price change of -3.81% so far this year. Currently paying a dividend of $1.03 per share, the company has a dividend yield of 2%. In comparison, the Diversified Operations industry's yield is 0.15%, while the S&P 500's yield is 1.66%.
In terms of dividend growth, the company's current annualized dividend of $4.12 is up 3.8% from last year. In the past five-year period, Honeywell International Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.99%. 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. Honeywell International Inc.'s current payout ratio is 46%, meaning it paid out 46% of its trailing 12-month EPS as dividend.
HON is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $9.16 per share, representing a year-over-year earnings growth rate of 4.57%.
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. 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 HON is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why Honeywell International Inc. (HON) is a Top Dividend Stock for Your Portfolio
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Honeywell International Inc. In Focus
Headquartered in Charlotte, Honeywell International Inc. (HON - Free Report) is a Conglomerates stock that has seen a price change of -3.81% so far this year. Currently paying a dividend of $1.03 per share, the company has a dividend yield of 2%. In comparison, the Diversified Operations industry's yield is 0.15%, while the S&P 500's yield is 1.66%.
In terms of dividend growth, the company's current annualized dividend of $4.12 is up 3.8% from last year. In the past five-year period, Honeywell International Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.99%. 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. Honeywell International Inc.'s current payout ratio is 46%, meaning it paid out 46% of its trailing 12-month EPS as dividend.
HON is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $9.16 per share, representing a year-over-year earnings growth rate of 4.57%.
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. 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 HON is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).