We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
This is Why Watsco (WSO) is a Great Dividend Stock
Read MoreHide Full Article
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.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Watsco in Focus
Watsco (WSO - Free Report) is headquartered in Miami, and is in the Construction sector. The stock has seen a price change of -3.39% since the start of the year. The heating and cooling company is paying out a dividend of $2.9 per share at the moment, with a dividend yield of 3.53% compared to the Building Products - Air Conditioner and Heating industry's yield of 0.83% and the S&P 500's yield of 1.91%.
Taking a look at the company's dividend growth, its current annualized dividend of $5.80 is up 26.1% from last year. Watsco has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 31.15%. 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. Watsco's current payout ratio is 97%, meaning it paid out 97% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for WSO for this fiscal year. The Zacks Consensus Estimate for 2018 is $6.69 per share, which represents a year-over-year growth rate of 22.08%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, WSO 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).
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
This is Why Watsco (WSO) is a Great Dividend Stock
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.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Watsco in Focus
Watsco (WSO - Free Report) is headquartered in Miami, and is in the Construction sector. The stock has seen a price change of -3.39% since the start of the year. The heating and cooling company is paying out a dividend of $2.9 per share at the moment, with a dividend yield of 3.53% compared to the Building Products - Air Conditioner and Heating industry's yield of 0.83% and the S&P 500's yield of 1.91%.
Taking a look at the company's dividend growth, its current annualized dividend of $5.80 is up 26.1% from last year. Watsco has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 31.15%. 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. Watsco's current payout ratio is 97%, meaning it paid out 97% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for WSO for this fiscal year. The Zacks Consensus Estimate for 2018 is $6.69 per share, which represents a year-over-year growth rate of 22.08%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, WSO 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).