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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.
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.
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 10.83% since the start of the year. The chemical company is currently shelling out a dividend of $0.4 per share, with a dividend yield of 2.16%. This compares to the Chemical - Diversified industry's yield of 2.15% and the S&P 500's yield of 1.73%.
In terms of dividend growth, the company's current annualized dividend of $1.60 is up 3.9% from last year. Over the last 5 years, Cabot has increased its dividend 3 times on a year-over-year basis for an average annual increase of 3.13%. 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 30%. This means it paid out 30% of its trailing 12-month EPS as dividend.
CBT is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $6.36 per share, representing a year-over-year earnings growth rate of 18.22%.
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. 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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CBT presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Cabot (CBT) Could Be a Great Choice
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.
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.
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 10.83% since the start of the year. The chemical company is currently shelling out a dividend of $0.4 per share, with a dividend yield of 2.16%. This compares to the Chemical - Diversified industry's yield of 2.15% and the S&P 500's yield of 1.73%.
In terms of dividend growth, the company's current annualized dividend of $1.60 is up 3.9% from last year. Over the last 5 years, Cabot has increased its dividend 3 times on a year-over-year basis for an average annual increase of 3.13%. 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 30%. This means it paid out 30% of its trailing 12-month EPS as dividend.
CBT is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $6.36 per share, representing a year-over-year earnings growth rate of 18.22%.
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. 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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CBT presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).