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This is Why Packaging Corp. (PKG) is a Great Dividend Stock
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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. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Packaging Corp. In Focus
Based in Lake Forest, Packaging Corp. (PKG - Free Report) is in the Industrial Products sector, and so far this year, shares have seen a price change of 8.14%. The maker of containerboard and corrugated packaging products is paying out a dividend of $1 per share at the moment, with a dividend yield of 3.4% compared to the Containers - Paper and Packaging industry's yield of 2.42% and the S&P 500's yield of 1.68%.
Looking at dividend growth, the company's current annualized dividend of $5 is up 25% from last year. In the past five-year period, Packaging Corp. has increased its dividend 2 times on a year-over-year basis for an average annual increase of 10.86%. 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. Right now, Packaging Corp.'s payout ratio is 39%, which means it paid out 39% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PKG for this fiscal year. The Zacks Consensus Estimate for 2022 is $11.66 per share, with earnings expected to increase 24.17% 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. However, not all companies offer 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 have to be mindful 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 PKG 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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This is Why Packaging Corp. (PKG) is a Great Dividend Stock
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Packaging Corp. In Focus
Based in Lake Forest, Packaging Corp. (PKG - Free Report) is in the Industrial Products sector, and so far this year, shares have seen a price change of 8.14%. The maker of containerboard and corrugated packaging products is paying out a dividend of $1 per share at the moment, with a dividend yield of 3.4% compared to the Containers - Paper and Packaging industry's yield of 2.42% and the S&P 500's yield of 1.68%.
Looking at dividend growth, the company's current annualized dividend of $5 is up 25% from last year. In the past five-year period, Packaging Corp. has increased its dividend 2 times on a year-over-year basis for an average annual increase of 10.86%. 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. Right now, Packaging Corp.'s payout ratio is 39%, which means it paid out 39% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PKG for this fiscal year. The Zacks Consensus Estimate for 2022 is $11.66 per share, with earnings expected to increase 24.17% 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. However, not all companies offer 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 have to be mindful 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 PKG is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).