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Are You Looking for a High-Growth Dividend Stock? Texas Instruments (TXN) 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 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.
Texas Instruments in Focus
Headquartered in Dallas, Texas Instruments (TXN - Free Report) is a Computer and Technology stock that has seen a price change of -5.31% so far this year. The chipmaker is currently shelling out a dividend of $1.15 per share, with a dividend yield of 2.58%. This compares to the Semiconductor - General industry's yield of 0.61% and the S&P 500's yield of 1.46%.
In terms of dividend growth, the company's current annualized dividend of $4.60 is up 9.3% from last year. Texas Instruments has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 18.99%. 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. Right now, Texas Instruments's payout ratio is 56%, which means it paid out 56% of its trailing 12-month EPS as dividend.
TXN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $9.09 per share, which represents a year-over-year growth rate of 10.05%.
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 TXN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Are You Looking for a High-Growth Dividend Stock? Texas Instruments (TXN) Could Be a Great Choice
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 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.
Texas Instruments in Focus
Headquartered in Dallas, Texas Instruments (TXN - Free Report) is a Computer and Technology stock that has seen a price change of -5.31% so far this year. The chipmaker is currently shelling out a dividend of $1.15 per share, with a dividend yield of 2.58%. This compares to the Semiconductor - General industry's yield of 0.61% and the S&P 500's yield of 1.46%.
In terms of dividend growth, the company's current annualized dividend of $4.60 is up 9.3% from last year. Texas Instruments has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 18.99%. 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. Right now, Texas Instruments's payout ratio is 56%, which means it paid out 56% of its trailing 12-month EPS as dividend.
TXN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $9.09 per share, which represents a year-over-year growth rate of 10.05%.
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 TXN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).