Are You Looking for a High-Growth Dividend Stock?
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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Kronos Worldwide in Focus
Kronos Worldwide (KRO) is headquartered in Dallas, and is in the Basic Materials sector. The stock has seen a price change of 12.99% since the start of the year. The maker of titanium dioxide pigments is currently shelling out a dividend of $0.19 per share, with a dividend yield of 4.48%. This compares to the Chemical - Diversified industry's yield of 2.02% and the S&P 500's yield of 1.74%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.76 is up 5.6% from last year. Kronos Worldwide has increased its dividend 3 times on a year-over-year basis over the last 5 years 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. Kronos Worldwide's current payout ratio is 58%, meaning it paid out 58% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, KRO expects solid earnings growth. 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 a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that KRO is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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