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American States Water (AWR) Could Be a Great Choice
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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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
American States Water in Focus
Headquartered in San Dimas, American States Water (AWR - Free Report) is a Utilities stock that has seen a price change of -10.53% so far this year. The water and electric utility is currently shelling out a dividend of $0.43 per share, with a dividend yield of 2.39%. This compares to the Utility - Water Supply industry's yield of 2.35% and the S&P 500's yield of 1.59%.
In terms of dividend growth, the company's current annualized dividend of $1.72 is up 3.9% from last year. Over the last 5 years, American States Water has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.20%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, American States Water's payout ratio is 60%, which means it paid out 60% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for AWR for this fiscal year. The Zacks Consensus Estimate for 2024 is $3.01 per share, with earnings expected to increase 5.61% from the year ago period.
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. 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, AWR 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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American States Water (AWR) 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. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
American States Water in Focus
Headquartered in San Dimas, American States Water (AWR - Free Report) is a Utilities stock that has seen a price change of -10.53% so far this year. The water and electric utility is currently shelling out a dividend of $0.43 per share, with a dividend yield of 2.39%. This compares to the Utility - Water Supply industry's yield of 2.35% and the S&P 500's yield of 1.59%.
In terms of dividend growth, the company's current annualized dividend of $1.72 is up 3.9% from last year. Over the last 5 years, American States Water has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.20%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, American States Water's payout ratio is 60%, which means it paid out 60% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for AWR for this fiscal year. The Zacks Consensus Estimate for 2024 is $3.01 per share, with earnings expected to increase 5.61% from the year ago period.
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. 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, AWR 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).