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Why NiSource (NI) is a Top Dividend Stock for Your Portfolio
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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. However, 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
NiSource in Focus
Based in Merrillville, NiSource (NI - Free Report) is in the Utilities sector, and so far this year, shares have seen a price change of 26.67%. Currently paying a dividend of $0.26 per share, the company has a dividend yield of 3.15%. In comparison, the Utility - Electric Power industry's yield is 3.28%, while the S&P 500's yield is 1.59%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.06 is up 6% from last year. NiSource has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 6.06%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. NiSource's current payout ratio is 60%. This means it paid out 60% of its trailing 12-month EPS as dividend.
NI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $1.72 per share, with earnings expected to increase 7.50% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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 must be conscious 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 NI is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why NiSource (NI) is a Top Dividend Stock for Your Portfolio
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
NiSource in Focus
Based in Merrillville, NiSource (NI - Free Report) is in the Utilities sector, and so far this year, shares have seen a price change of 26.67%. Currently paying a dividend of $0.26 per share, the company has a dividend yield of 3.15%. In comparison, the Utility - Electric Power industry's yield is 3.28%, while the S&P 500's yield is 1.59%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.06 is up 6% from last year. NiSource has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 6.06%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. NiSource's current payout ratio is 60%. This means it paid out 60% of its trailing 12-month EPS as dividend.
NI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $1.72 per share, with earnings expected to increase 7.50% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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 must be conscious 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 NI is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).