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. 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.
Primo in Focus
Based in Tampa, Primo (PRMW) is in the Utilities sector, and so far this year, shares have seen a price change of -5.08%. Currently paying a dividend of $0.08 per share, the company has a dividend yield of 2.17%. In comparison, the Utility - Water Supply industry's yield is 2.12%, while the S&P 500's yield is 1.7%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.32 is up 14.3% from last year. Over the last 5 years, Primo has increased its dividend 2 times on a year-over-year basis for an average annual increase of 5.49%. 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, Primo's payout ratio is 51%, which means it paid out 51% of its trailing 12-month EPS as dividend.
PRMW is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $0.80 per share, which represents a year-over-year growth rate of 19.40%.
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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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, PRMW 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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Primo Water Corporation (PRMW) : Free Stock Analysis Report
