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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 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.
HP in Focus
Headquartered in Palo Alto, HP (HPQ - Free Report) is a Computer and Technology stock that has seen a price change of 2.71% so far this year. The personal computer and printer maker is currently shelling out a dividend of $0.25 per share, with a dividend yield of 2.58%. This compares to the Computer - Mini computers industry's yield of 1.21% and the S&P 500's yield of 1.45%.
In terms of dividend growth, the company's current annualized dividend of $1 is up 29% from last year. HP has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 10.02%. 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. HP's current payout ratio is 25%. This means it paid out 25% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, HPQ expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $4.27 per share, with earnings expected to increase 12.66% from the year ago period.
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. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HPQ 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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Why HP (HPQ) is a Great Dividend Stock Right Now
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 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.
HP in Focus
Headquartered in Palo Alto, HP (HPQ - Free Report) is a Computer and Technology stock that has seen a price change of 2.71% so far this year. The personal computer and printer maker is currently shelling out a dividend of $0.25 per share, with a dividend yield of 2.58%. This compares to the Computer - Mini computers industry's yield of 1.21% and the S&P 500's yield of 1.45%.
In terms of dividend growth, the company's current annualized dividend of $1 is up 29% from last year. HP has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 10.02%. 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. HP's current payout ratio is 25%. This means it paid out 25% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, HPQ expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $4.27 per share, with earnings expected to increase 12.66% from the year ago period.
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. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HPQ 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).