Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.
Huntsman in Focus
Headquartered in The Woodlands, Huntsman (HUN) is a Basic Materials stock that has seen a price change of 2.31% so far this year. Currently paying a dividend of $0.19 per share, the company has a dividend yield of 2.92%. In comparison, the Chemical - Diversified industry's yield is 1.52%, while the S&P 500's yield is 1.35%.
Looking at dividend growth, the company's current annualized dividend of $0.75 is up 15.4% from last year. In the past five-year period, Huntsman has increased its dividend 2 times on a year-over-year basis for an average annual increase of 7.73%. 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, Huntsman's payout ratio is 48%, which means it paid out 48% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HUN for this fiscal year. The Zacks Consensus Estimate for 2021 is $2.80 per share, representing a year-over-year earnings growth rate of 185.71%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HUN 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).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Huntsman Corporation (HUN) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research