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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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Unitil in Focus
Unitil (UTL - Free Report) is headquartered in Hampton, and is in the Utilities sector. The stock has seen a price change of -0.45% since the start of the year. Currently paying a dividend of $0.41 per share, the company has a dividend yield of 3.17%. In comparison, the Utility - Electric Power industry's yield is 3.52%, while the S&P 500's yield is 1.59%.
Looking at dividend growth, the company's current annualized dividend of $1.62 is up 3.8% from last year. In the past five-year period, Unitil has increased its dividend 5 times on a year-over-year basis for an average annual increase of 1.97%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Unitil's current payout ratio is 59%, meaning it paid out 59% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, UTL expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $2.78 per share, representing a year-over-year earnings growth rate of 7.34%.
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. It's important to keep in mind that not all companies provide 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, UTL 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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Unitil (UTL) Could Be a Great Choice
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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Unitil in Focus
Unitil (UTL - Free Report) is headquartered in Hampton, and is in the Utilities sector. The stock has seen a price change of -0.45% since the start of the year. Currently paying a dividend of $0.41 per share, the company has a dividend yield of 3.17%. In comparison, the Utility - Electric Power industry's yield is 3.52%, while the S&P 500's yield is 1.59%.
Looking at dividend growth, the company's current annualized dividend of $1.62 is up 3.8% from last year. In the past five-year period, Unitil has increased its dividend 5 times on a year-over-year basis for an average annual increase of 1.97%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Unitil's current payout ratio is 59%, meaning it paid out 59% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, UTL expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $2.78 per share, representing a year-over-year earnings growth rate of 7.34%.
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. It's important to keep in mind that not all companies provide 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, UTL 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).