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Is IdaCorp (IDA) a Good Pick for Income Investors?
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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.
IdaCorp in Focus
IdaCorp (IDA - Free Report) is headquartered in Boise, and is in the Utilities sector. The stock has seen a price change of 9.51% since the start of the year. The utility company is currently shelling out a dividend of $0.59 per share, with a dividend yield of 2.36%. This compares to the Utility - Electric Power industry's yield of 3.22% and the S&P 500's yield of 1.78%.
In terms of dividend growth, the company's current annualized dividend of $2.36 is up 5.4% from last year. Over the last 5 years, IdaCorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.64%. 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. IdaCorp's current payout ratio is 52%. This means it paid out 52% of its trailing 12-month EPS as dividend.
IDA is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $4.28 per share, with earnings expected to increase 1.66% 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. However, not all companies offer 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, IDA 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).
We are reissuing this article to correct a mistake. The original article should no longer be relied upon.
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Is IdaCorp (IDA) a Good Pick for Income Investors?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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.
IdaCorp in Focus
IdaCorp (IDA - Free Report) is headquartered in Boise, and is in the Utilities sector. The stock has seen a price change of 9.51% since the start of the year. The utility company is currently shelling out a dividend of $0.59 per share, with a dividend yield of 2.36%. This compares to the Utility - Electric Power industry's yield of 3.22% and the S&P 500's yield of 1.78%.
In terms of dividend growth, the company's current annualized dividend of $2.36 is up 5.4% from last year. Over the last 5 years, IdaCorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.64%. 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. IdaCorp's current payout ratio is 52%. This means it paid out 52% of its trailing 12-month EPS as dividend.
IDA is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $4.28 per share, with earnings expected to increase 1.66% 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. However, not all companies offer 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, IDA 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).
We are reissuing this article to correct a mistake. The original article should no longer be relied upon.