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This is Why Williams-Sonoma (WSM) is a Great Dividend Stock
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
Williams-Sonoma in Focus
Headquartered in San Francisco, Williams-Sonoma (WSM - Free Report) is a Retail-Wholesale stock that has seen a price change of -18.7% so far this year. The seller of cookware and home furnishings is currently shelling out a dividend of $0.78 per share, with a dividend yield of 2.27%. This compares to the Retail - Home Furnishings industry's yield of 1.75% and the S&P 500's yield of 1.71%.
In terms of dividend growth, the company's current annualized dividend of $3.12 is up 20% from last year. Over the last 5 years, Williams-Sonoma has increased its dividend 4 times on a year-over-year basis for an average annual increase of 12.03%. 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. Williams-Sonoma's current payout ratio is 20%, meaning it paid out 20% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, WSM expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $16.22 per share, with earnings expected to increase 9.23% 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.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, WSM 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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This is Why Williams-Sonoma (WSM) is a Great Dividend Stock
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
Williams-Sonoma in Focus
Headquartered in San Francisco, Williams-Sonoma (WSM - Free Report) is a Retail-Wholesale stock that has seen a price change of -18.7% so far this year. The seller of cookware and home furnishings is currently shelling out a dividend of $0.78 per share, with a dividend yield of 2.27%. This compares to the Retail - Home Furnishings industry's yield of 1.75% and the S&P 500's yield of 1.71%.
In terms of dividend growth, the company's current annualized dividend of $3.12 is up 20% from last year. Over the last 5 years, Williams-Sonoma has increased its dividend 4 times on a year-over-year basis for an average annual increase of 12.03%. 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. Williams-Sonoma's current payout ratio is 20%, meaning it paid out 20% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, WSM expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $16.22 per share, with earnings expected to increase 9.23% 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.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, WSM 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).