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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
Domtar in Focus
Based in Fort Mill, Domtar is in the Basic Materials sector, and so far this year, shares have seen a price change of 2.08%. The paper and packaging maker is paying out a dividend of $0.44 per share at the moment, with a dividend yield of 3.44% compared to the Paper and Related Products industry's yield of 1.6% and the S&P 500's yield of 1.81%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.74 is up 4.8% from last year. Domtar has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 8.32%. 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. Right now, Domtar's payout ratio is 54%, which means it paid out 54% of its trailing 12-month EPS as dividend.
UFS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $3.86 per share, with earnings expected to increase 48.46% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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 UFS 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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Is Domtar (UFS) a Great Dividend Play?
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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
Domtar in Focus
Based in Fort Mill, Domtar is in the Basic Materials sector, and so far this year, shares have seen a price change of 2.08%. The paper and packaging maker is paying out a dividend of $0.44 per share at the moment, with a dividend yield of 3.44% compared to the Paper and Related Products industry's yield of 1.6% and the S&P 500's yield of 1.81%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.74 is up 4.8% from last year. Domtar has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 8.32%. 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. Right now, Domtar's payout ratio is 54%, which means it paid out 54% of its trailing 12-month EPS as dividend.
UFS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $3.86 per share, with earnings expected to increase 48.46% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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 UFS is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).