Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But 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.
United Technologies in Focus
Based in Farmington, United Technologies is in the Conglomerates sector, and so far this year, shares have seen a price change of 10.01%. The maker of elevators, jet engines and other products is currently shelling out a dividend of $0.7 per share, with a dividend yield of 2%. This compares to the Diversified Operations industry's yield of 1.57% and the S&P 500's yield of 1.77%.
In terms of dividend growth, the company's current annualized dividend of $2.80 is up 2.9% from last year. Over the last 5 years, United Technologies has increased its dividend 4 times on a year-over-year basis for an average annual increase of 4.78%. 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, United Technologies's payout ratio is 40%, which means it paid out 40% of its trailing 12-month EPS as dividend.
UTX is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $7.23 per share, which represents a year-over-year growth rate of 8.72%.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, UTX presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Why United Technologies (UTX) is a Top Dividend Stock
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But 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.
United Technologies in Focus
Based in Farmington, United Technologies is in the Conglomerates sector, and so far this year, shares have seen a price change of 10.01%. The maker of elevators, jet engines and other products is currently shelling out a dividend of $0.7 per share, with a dividend yield of 2%. This compares to the Diversified Operations industry's yield of 1.57% and the S&P 500's yield of 1.77%.
In terms of dividend growth, the company's current annualized dividend of $2.80 is up 2.9% from last year. Over the last 5 years, United Technologies has increased its dividend 4 times on a year-over-year basis for an average annual increase of 4.78%. 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, United Technologies's payout ratio is 40%, which means it paid out 40% of its trailing 12-month EPS as dividend.
UTX is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $7.23 per share, which represents a year-over-year growth rate of 8.72%.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, UTX presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).