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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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Kohl's in Focus
Based in Menomonee Falls, Kohl's (KSS - Free Report) is in the Retail-Wholesale sector, and so far this year, shares have seen a price change of 40.92%. Currently paying a dividend of $0.61 per share, the company has a dividend yield of 3.19%. In comparison, the Retail - Regional Department Stores industry's yield is 0.47%, while the S&P 500's yield is 1.82%.
Looking at dividend growth, the company's current annualized dividend of $2.44 is up 10.9% from last year. Over the last 5 years, Kohl's has increased its dividend 5 times on a year-over-year basis for an average annual increase of 12.14%. 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. Kohl's's current payout ratio is 55%, meaning it paid out 55% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for KSS for this fiscal year. The Zacks Consensus Estimate for 2018 is $5.40 per share, representing a year-over-year earnings growth rate of 28.88%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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, KSS 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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Why Kohl's (KSS) is a Great Dividend Stock
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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Kohl's in Focus
Based in Menomonee Falls, Kohl's (KSS - Free Report) is in the Retail-Wholesale sector, and so far this year, shares have seen a price change of 40.92%. Currently paying a dividend of $0.61 per share, the company has a dividend yield of 3.19%. In comparison, the Retail - Regional Department Stores industry's yield is 0.47%, while the S&P 500's yield is 1.82%.
Looking at dividend growth, the company's current annualized dividend of $2.44 is up 10.9% from last year. Over the last 5 years, Kohl's has increased its dividend 5 times on a year-over-year basis for an average annual increase of 12.14%. 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. Kohl's's current payout ratio is 55%, meaning it paid out 55% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for KSS for this fiscal year. The Zacks Consensus Estimate for 2018 is $5.40 per share, representing a year-over-year earnings growth rate of 28.88%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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, KSS 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).