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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. However, 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.
HP in Focus
Based in Palo Alto, HP (HPQ - Free Report) is in the Computer and Technology sector, and so far this year, shares have seen a price change of 0.64%. The personal computer and printer maker is currently shelling out a dividend of $0.25 per share, with a dividend yield of 2.64%. This compares to the Computer - Mini computers industry's yield of 1.23% and the S&P 500's yield of 1.5%.
Looking at 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 11.64%. 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 25%, meaning it paid out 25% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HPQ for this fiscal year. The Zacks Consensus Estimate for 2022 is $4.27 per share, which represents a year-over-year growth rate of 12.66%.
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.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. 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. However, 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.
HP in Focus
Based in Palo Alto, HP (HPQ - Free Report) is in the Computer and Technology sector, and so far this year, shares have seen a price change of 0.64%. The personal computer and printer maker is currently shelling out a dividend of $0.25 per share, with a dividend yield of 2.64%. This compares to the Computer - Mini computers industry's yield of 1.23% and the S&P 500's yield of 1.5%.
Looking at 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 11.64%. 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 25%, meaning it paid out 25% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HPQ for this fiscal year. The Zacks Consensus Estimate for 2022 is $4.27 per share, which represents a year-over-year growth rate of 12.66%.
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.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. 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).