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Kohl's (KSS) is a Top Dividend Stock Right Now: Should You Buy?
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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.
Kohl's in Focus
Based in Menomonee Falls, Kohl's (KSS - Free Report) is in the Retail-Wholesale sector, and so far this year, shares have seen a price change of 31.4%. The department store operator is currently shelling out a dividend of $0.61 per share, with a dividend yield of 3.42%. This compares to the Retail - Regional Department Stores industry's yield of 0.55% and the S&P 500's yield of 1.93%.
In terms of dividend growth, the company's current annualized dividend of $2.44 is up 10.9% from last year. Kohl's has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 12.14%. 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. Kohl's's current payout ratio is 49%. This means it paid out 49% of its trailing 12-month EPS as dividend.
KSS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $5.46 per share, which represents a year-over-year growth rate of 30.31%.
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. But, not every company offers 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. That said, they can take comfort from the fact that KSS 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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Kohl's (KSS) is a Top Dividend Stock Right Now: Should You Buy?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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.
Kohl's in Focus
Based in Menomonee Falls, Kohl's (KSS - Free Report) is in the Retail-Wholesale sector, and so far this year, shares have seen a price change of 31.4%. The department store operator is currently shelling out a dividend of $0.61 per share, with a dividend yield of 3.42%. This compares to the Retail - Regional Department Stores industry's yield of 0.55% and the S&P 500's yield of 1.93%.
In terms of dividend growth, the company's current annualized dividend of $2.44 is up 10.9% from last year. Kohl's has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 12.14%. 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. Kohl's's current payout ratio is 49%. This means it paid out 49% of its trailing 12-month EPS as dividend.
KSS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $5.46 per share, which represents a year-over-year growth rate of 30.31%.
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. But, not every company offers 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. That said, they can take comfort from the fact that KSS is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).