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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Hubbell in Focus
Hubbell (HUBB) is headquartered in Shelton, and is in the Industrial Products sector. The stock has seen a price change of 1.38% since the start of the year. The electrical products manufacturer is paying out a dividend of $0.98 per share at the moment, with a dividend yield of 2.47% compared to the Manufacturing - Electrical Utilities industry's yield of 1.46% and the S&P 500's yield of 1.47%.
Looking at dividend growth, the company's current annualized dividend of $3.92 is up 5.7% from last year. Over the last 5 years, Hubbell has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.47%. 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. Hubbell's current payout ratio is 47%, meaning it paid out 47% of its trailing 12-month EPS as dividend.
HUBB is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $7.97 per share, representing a year-over-year earnings growth rate of 5.15%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HUBB 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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Hubbell Inc (HUBB) : Free Stock Analysis Report
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