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Why Primo (PRMW) is a Top Dividend Stock for Your Portfolio
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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 when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Primo in Focus
Headquartered in Tampa, Primo (PRMW - Free Report) is a Utilities stock that has seen a price change of -13.64% so far this year. The maker of pure-play water solutions is paying out a dividend of $0.08 per share at the moment, with a dividend yield of 2.38% compared to the Utility - Water Supply industry's yield of 2.3% and the S&P 500's yield of 1.74%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.32 is up 14.3% from last year. Over the last 5 years, Primo has increased its dividend 2 times on a year-over-year basis for an average annual increase of 6.47%. 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. Primo's current payout ratio is 51%. This means it paid out 51% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PRMW expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $0.80 per share, which represents a year-over-year growth rate of 19.40%.
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.
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. With that in mind, PRMW 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 Primo (PRMW) is a Top Dividend Stock for Your Portfolio
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Primo in Focus
Headquartered in Tampa, Primo (PRMW - Free Report) is a Utilities stock that has seen a price change of -13.64% so far this year. The maker of pure-play water solutions is paying out a dividend of $0.08 per share at the moment, with a dividend yield of 2.38% compared to the Utility - Water Supply industry's yield of 2.3% and the S&P 500's yield of 1.74%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.32 is up 14.3% from last year. Over the last 5 years, Primo has increased its dividend 2 times on a year-over-year basis for an average annual increase of 6.47%. 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. Primo's current payout ratio is 51%. This means it paid out 51% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PRMW expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $0.80 per share, which represents a year-over-year growth rate of 19.40%.
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.
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. With that in mind, PRMW 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).