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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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Cabot in Focus
Cabot (CBT - Free Report) is headquartered in Boston, and is in the Basic Materials sector. The stock has seen a price change of 24.11% since the start of the year. Currently paying a dividend of $0.37 per share, the company has a dividend yield of 2.12%. In comparison, the Chemical - Diversified industry's yield is 1.95%, while the S&P 500's yield is 1.61%.
In terms of dividend growth, the company's current annualized dividend of $1.48 is up 5.7% from last year. In the past five-year period, Cabot has increased its dividend 4 times on a year-over-year basis for an average annual increase of 3.25%. 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. Cabot's current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CBT expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $6.10 per share, with earnings expected to increase 21.51% from the year ago period.
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. That said, they can take comfort from the fact that CBT is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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This is Why Cabot (CBT) 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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Cabot in Focus
Cabot (CBT - Free Report) is headquartered in Boston, and is in the Basic Materials sector. The stock has seen a price change of 24.11% since the start of the year. Currently paying a dividend of $0.37 per share, the company has a dividend yield of 2.12%. In comparison, the Chemical - Diversified industry's yield is 1.95%, while the S&P 500's yield is 1.61%.
In terms of dividend growth, the company's current annualized dividend of $1.48 is up 5.7% from last year. In the past five-year period, Cabot has increased its dividend 4 times on a year-over-year basis for an average annual increase of 3.25%. 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. Cabot's current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CBT expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $6.10 per share, with earnings expected to increase 21.51% from the year ago period.
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. That said, they can take comfort from the fact that CBT is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).