Back to top

Image: Bigstock

Why Repsol (REPYY) is a Top Dividend Stock

Read MoreHide Full Article

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Repsol in Focus

Repsol (REPYY - Free Report) is headquartered in Madrid, and is in the Oils-Energy sector. The stock has seen a price change of 10.75% since the start of the year. Currently paying a dividend of $0.46 per share, the company has a dividend yield of 4.7%. In comparison, the Oil and Gas - Integrated - International industry's yield is 2.49%, while the S&P 500's yield is 1.77%.

Looking at dividend growth, the company's current annualized dividend of $0.92 is up 20.1% from last year. Over the last 5 years, Repsol has increased its dividend 2 times on a year-over-year basis for an average annual increase of 2.54%. 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. Right now, Repsol's payout ratio is 41%, which means it paid out 41% of its trailing 12-month EPS as dividend.

REPYY is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $2.01 per share, with earnings expected to increase 14.86% from the year ago period.

Bottom Line

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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 REPYY is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Repsol SA (REPYY) - free report >>