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Targa Resources, Inc. (TRGP) Could Be a Great Choice
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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.
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.
Targa Resources, Inc. In Focus
Targa Resources, Inc. (TRGP - Free Report) is headquartered in Houston, and is in the Oils-Energy sector. The stock has seen a price change of 34.91% since the start of the year. The company is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 2.56% compared to the Oil and Gas - Refining and Marketing - Master Limited Partnerships industry's yield of 5.93% and the S&P 500's yield of 1.57%.
In terms of dividend growth, the company's current annualized dividend of $3 is up 62.2% from last year. Targa Resources, Inc. has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 1.67%. 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. Targa Resources's current payout ratio is 54%, meaning it paid out 54% of its trailing 12-month EPS as dividend.
TRGP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $5.71 per share, which represents a year-over-year growth rate of 56.01%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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 TRGP 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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Targa Resources, Inc. (TRGP) Could Be a Great Choice
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.
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.
Targa Resources, Inc. In Focus
Targa Resources, Inc. (TRGP - Free Report) is headquartered in Houston, and is in the Oils-Energy sector. The stock has seen a price change of 34.91% since the start of the year. The company is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 2.56% compared to the Oil and Gas - Refining and Marketing - Master Limited Partnerships industry's yield of 5.93% and the S&P 500's yield of 1.57%.
In terms of dividend growth, the company's current annualized dividend of $3 is up 62.2% from last year. Targa Resources, Inc. has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 1.67%. 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. Targa Resources's current payout ratio is 54%, meaning it paid out 54% of its trailing 12-month EPS as dividend.
TRGP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $5.71 per share, which represents a year-over-year growth rate of 56.01%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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 TRGP is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).