Kronos Worldwide (KRO) 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 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.
Kronos Worldwide in Focus
Headquartered in Dallas, Kronos Worldwide (KRO) is a Basic Materials stock that has seen a price change of 15.39% so far this year. The maker of titanium dioxide pigments is currently shelling out a dividend of $0.19 per share, with a dividend yield of 4.39%. This compares to the Chemical - Diversified industry's yield of 2.06% and the S&P 500's yield of 1.62%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.76 is up 5.6% from last year. In the past five-year period, Kronos Worldwide has increased its dividend 3 times on a year-over-year basis for an average annual increase of 3.44%. 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, Kronos Worldwide's payout ratio is 58%, which means it paid out 58% of its trailing 12-month EPS as dividend.
KRO is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.06 per share, with earnings expected to increase 110.20% 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.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that KRO is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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