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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. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
HP in Focus
HP (HPQ - Free Report) is headquartered in Palo Alto, and is in the Computer and Technology sector. The stock has seen a price change of 18.05% since the start of the year. The personal computer and printer maker is currently shelling out a dividend of $0.19 per share, with a dividend yield of 3.2%. This compares to the Computer - Mini computers industry's yield of 1.16% and the S&P 500's yield of 1.48%.
Looking at dividend growth, the company's current annualized dividend of $0.78 is up 10.6% from last year. In the past five-year period, HP has increased its dividend 4 times on a year-over-year basis for an average annual increase of 6.46%. 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. HP's current payout ratio is 31%. This means it paid out 31% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HPQ for this fiscal year. The Zacks Consensus Estimate for 2020 is $2.67 per share, representing a year-over-year earnings growth rate of 17.11%.
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. 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. That said, they can take comfort from the fact that HPQ 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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This is Why HP (HPQ) is a Great Dividend Stock
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
HP in Focus
HP (HPQ - Free Report) is headquartered in Palo Alto, and is in the Computer and Technology sector. The stock has seen a price change of 18.05% since the start of the year. The personal computer and printer maker is currently shelling out a dividend of $0.19 per share, with a dividend yield of 3.2%. This compares to the Computer - Mini computers industry's yield of 1.16% and the S&P 500's yield of 1.48%.
Looking at dividend growth, the company's current annualized dividend of $0.78 is up 10.6% from last year. In the past five-year period, HP has increased its dividend 4 times on a year-over-year basis for an average annual increase of 6.46%. 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. HP's current payout ratio is 31%. This means it paid out 31% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HPQ for this fiscal year. The Zacks Consensus Estimate for 2020 is $2.67 per share, representing a year-over-year earnings growth rate of 17.11%.
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. 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. That said, they can take comfort from the fact that HPQ is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).