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Why Eaton (ETN) is a Great Dividend Stock Right Now
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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. 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.
Eaton in Focus
Eaton (ETN - Free Report) is headquartered in Dublin, and is in the Industrial Products sector. The stock has seen a price change of 8.51% since the start of the year. The power management company is paying out a dividend of $0.86 per share at the moment, with a dividend yield of 2.02% compared to the Manufacturing - Electronics industry's yield of 0.9% and the S&P 500's yield of 1.76%.
In terms of dividend growth, the company's current annualized dividend of $3.44 is up 6.2% from last year. Eaton has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 4.70%. 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. Eaton's current payout ratio is 43%. This means it paid out 43% of its trailing 12-month EPS as dividend.
ETN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $8.26 per share, which represents a year-over-year growth rate of 9.11%.
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.
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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ETN 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 Eaton (ETN) is a Great Dividend Stock Right Now
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.
Eaton in Focus
Eaton (ETN - Free Report) is headquartered in Dublin, and is in the Industrial Products sector. The stock has seen a price change of 8.51% since the start of the year. The power management company is paying out a dividend of $0.86 per share at the moment, with a dividend yield of 2.02% compared to the Manufacturing - Electronics industry's yield of 0.9% and the S&P 500's yield of 1.76%.
In terms of dividend growth, the company's current annualized dividend of $3.44 is up 6.2% from last year. Eaton has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 4.70%. 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. Eaton's current payout ratio is 43%. This means it paid out 43% of its trailing 12-month EPS as dividend.
ETN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $8.26 per share, which represents a year-over-year growth rate of 9.11%.
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.
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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ETN 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).