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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 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 2.38% since the start of the year. Currently paying a dividend of $0.86 per share, the company has a dividend yield of 2.14%. In comparison, the Manufacturing - Electronics industry's yield is 1.07%, while the S&P 500's yield is 1.72%.
Taking a look at the company's dividend growth, its 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 4.98%. 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. Eaton's current payout ratio is 43%. This means it paid out 43% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, ETN expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $8.25 per share, which represents a year-over-year growth rate of 8.98%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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, 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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Eaton (ETN) Could Be a Great Choice
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 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 2.38% since the start of the year. Currently paying a dividend of $0.86 per share, the company has a dividend yield of 2.14%. In comparison, the Manufacturing - Electronics industry's yield is 1.07%, while the S&P 500's yield is 1.72%.
Taking a look at the company's dividend growth, its 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 4.98%. 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. Eaton's current payout ratio is 43%. This means it paid out 43% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, ETN expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $8.25 per share, which represents a year-over-year growth rate of 8.98%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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, 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).