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Penske Automotive (PAG) is a Top Dividend Stock Right Now: Should You Buy?
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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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Penske Automotive in Focus
Based in Bloomfield Hills, Penske Automotive (PAG - Free Report) is in the Retail-Wholesale sector, and so far this year, shares have seen a price change of 1.12%. Currently paying a dividend of $0.42 per share, the company has a dividend yield of 3.31%. In comparison, the Automotive - Retail and Whole Sales industry's yield is 0.46%, while the S&P 500's yield is 1.83%.
Looking at dividend growth, the company's current annualized dividend of $1.68 is up 6.3% from last year. Over the last 5 years, Penske Automotive has increased its dividend 5 times on a year-over-year basis for an average annual increase of 13.84%. 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, Penske's payout ratio is 31%, which means it paid out 31% of its trailing 12-month EPS as dividend.
PAG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $5.66 per share, with earnings expected to increase 7.20% 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. 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, PAG 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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Penske Automotive (PAG) is a Top Dividend Stock Right Now: Should You Buy?
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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Penske Automotive in Focus
Based in Bloomfield Hills, Penske Automotive (PAG - Free Report) is in the Retail-Wholesale sector, and so far this year, shares have seen a price change of 1.12%. Currently paying a dividend of $0.42 per share, the company has a dividend yield of 3.31%. In comparison, the Automotive - Retail and Whole Sales industry's yield is 0.46%, while the S&P 500's yield is 1.83%.
Looking at dividend growth, the company's current annualized dividend of $1.68 is up 6.3% from last year. Over the last 5 years, Penske Automotive has increased its dividend 5 times on a year-over-year basis for an average annual increase of 13.84%. 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, Penske's payout ratio is 31%, which means it paid out 31% of its trailing 12-month EPS as dividend.
PAG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $5.66 per share, with earnings expected to increase 7.20% 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. 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, PAG 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).