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Avient (AVNT) Could Be a Great Choice

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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. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

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.

Avient in Focus

Avient (AVNT - Free Report) is headquartered in Avon Lake, and is in the Basic Materials sector. The stock has seen a price change of 1.06% since the start of the year. The maker of resins used in plastic pipe and other products is paying out a dividend of $0.26 per share at the moment, with a dividend yield of 2.45% compared to the Chemical - Diversified industry's yield of 1.81% and the S&P 500's yield of 1.61%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.03 is up 3% from last year. In the past five-year period, Avient has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.56%. 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. Right now, Avient's payout ratio is 42%, which means it paid out 42% of its trailing 12-month EPS as dividend.

AVNT is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $2.61 per share, with earnings expected to increase 10.59% from the year ago period.

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.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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, AVNT 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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