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Are You Looking for a High-Growth Dividend Stock? Mondelez (MDLZ) Could Be a Great Choice

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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.

Mondelez in Focus

Mondelez (MDLZ - Free Report) is headquartered in Deerfield, and is in the Consumer Staples sector. The stock has seen a price change of -10.09% since the start of the year. The maker of Oreo cookies, Cadbury chocolate and Trident gum is paying out a dividend of $0.28 per share at the moment, with a dividend yield of 2.3% compared to the Food - Miscellaneous industry's yield of 0.28% and the S&P 500's yield of 2.2%.

Looking at dividend growth, the company's current annualized dividend of $1.14 is up 4.6% from last year. Mondelez has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 14.53%. 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. Mondelez's current payout ratio is 45%. This means it paid out 45% of its trailing 12-month EPS as dividend.

MDLZ is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $2.55 per share, which represents a year-over-year growth rate of 3.24%.

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.

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, MDLZ is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).


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