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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. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
CenterPoint Energy in Focus
Headquartered in Houston, CenterPoint Energy (CNP - Free Report) is a Utilities stock that has seen a price change of 15.1% so far this year. Currently paying a dividend of $0.22 per share, the company has a dividend yield of 2.41%. In comparison, the Utility - Electric Power industry's yield is 3.34%, while the S&P 500's yield is 1.54%.
Looking at dividend growth, the company's current annualized dividend of $0.88 is up 8.6% from last year. In the past five-year period, CenterPoint Energy has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.25%. 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, CenterPoint's payout ratio is 55%, which means it paid out 55% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CNP expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $1.75 per share, which represents a year-over-year growth rate of 8.02%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that CNP 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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CenterPoint Energy (CNP) Could Be a Great Choice
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
CenterPoint Energy in Focus
Headquartered in Houston, CenterPoint Energy (CNP - Free Report) is a Utilities stock that has seen a price change of 15.1% so far this year. Currently paying a dividend of $0.22 per share, the company has a dividend yield of 2.41%. In comparison, the Utility - Electric Power industry's yield is 3.34%, while the S&P 500's yield is 1.54%.
Looking at dividend growth, the company's current annualized dividend of $0.88 is up 8.6% from last year. In the past five-year period, CenterPoint Energy has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.25%. 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, CenterPoint's payout ratio is 55%, which means it paid out 55% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CNP expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $1.75 per share, which represents a year-over-year growth rate of 8.02%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that CNP is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).