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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Sabesp in Focus
Headquartered in Sp, Sabesp (SBS) is a Utilities stock that has seen a price change of 24.91% so far this year. The waste management company is paying out a dividend of $0.24 per share at the moment, with a dividend yield of 2.41% compared to the Utility - Water Supply industry's yield of 1.92% and the S&P 500's yield of 1.94%.
Looking at dividend growth, the company's current annualized dividend of $0.24 is up 9.6% from last year. Sabesp has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 6.69%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, Sabesp's payout ratio is 20%, which means it paid out 20% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, SBS expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $1.13 per share, with earnings expected to increase 3.67% from the year ago period.
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, SBS presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
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Companhia de saneamento Basico Do Estado De Sao Paulo - Sabesp (SBS) : Free Stock Analysis Report
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