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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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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.
HNI in Focus
Headquartered in Muscatine, HNI (HNI - Free Report) is a Business Services stock that has seen a price change of -2.9% so far this year. The maker of office furniture and fireplaces is paying out a dividend of $0.33 per share at the moment, with a dividend yield of 2.7% compared to the Business - Office Products industry's yield of 2.78% and the S&P 500's yield of 1.53%.
In terms of dividend growth, the company's current annualized dividend of $1.32 is up 0.8% from last year. HNI has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 1.84%. 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. HNI's current payout ratio is 42%, meaning it paid out 42% of its trailing 12-month EPS as dividend.
HNI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $3.49 per share, representing a year-over-year earnings growth rate of 14.05%.
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.
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. 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 HNI 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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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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.
HNI in Focus
Headquartered in Muscatine, HNI (HNI - Free Report) is a Business Services stock that has seen a price change of -2.9% so far this year. The maker of office furniture and fireplaces is paying out a dividend of $0.33 per share at the moment, with a dividend yield of 2.7% compared to the Business - Office Products industry's yield of 2.78% and the S&P 500's yield of 1.53%.
In terms of dividend growth, the company's current annualized dividend of $1.32 is up 0.8% from last year. HNI has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 1.84%. 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. HNI's current payout ratio is 42%, meaning it paid out 42% of its trailing 12-month EPS as dividend.
HNI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $3.49 per share, representing a year-over-year earnings growth rate of 14.05%.
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.
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. 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 HNI is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).