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Why Genuine Parts (GPC) is a Great Dividend Stock Right Now
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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. However, 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.
Genuine Parts in Focus
Genuine Parts (GPC - Free Report) is headquartered in Atlanta, and is in the Auto-Tires-Trucks sector. The stock has seen a price change of -16.79% since the start of the year. The auto and industrial parts distributor is paying out a dividend of $0.95 per share at the moment, with a dividend yield of 2.63% compared to the Automotive - Replacement Parts industry's yield of 1.11% and the S&P 500's yield of 1.71%.
Taking a look at the company's dividend growth, its current annualized dividend of $3.80 is up 6.1% from last year. In the past five-year period, Genuine Parts has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.62%. 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. Right now, Genuine Parts's payout ratio is 43%, which means it paid out 43% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, GPC expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $9.25 per share, with earnings expected to increase 10.91% 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. 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 GPC 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 Genuine Parts (GPC) is a Great Dividend Stock Right Now
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, 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.
Genuine Parts in Focus
Genuine Parts (GPC - Free Report) is headquartered in Atlanta, and is in the Auto-Tires-Trucks sector. The stock has seen a price change of -16.79% since the start of the year. The auto and industrial parts distributor is paying out a dividend of $0.95 per share at the moment, with a dividend yield of 2.63% compared to the Automotive - Replacement Parts industry's yield of 1.11% and the S&P 500's yield of 1.71%.
Taking a look at the company's dividend growth, its current annualized dividend of $3.80 is up 6.1% from last year. In the past five-year period, Genuine Parts has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.62%. 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. Right now, Genuine Parts's payout ratio is 43%, which means it paid out 43% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, GPC expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $9.25 per share, with earnings expected to increase 10.91% 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. 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 GPC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).