UGI (UGI) is a Top Dividend Stock Right Now: Should You Buy?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
UGI in Focus
Headquartered in King Of Prussia, UGI (UGI) is a Utilities stock that has seen a price change of 28.17% so far this year. The natural gas and electric utilities operator. Is paying out a dividend of $0.33 per share at the moment, with a dividend yield of 2.95% compared to the Utility - Gas Distribution industry's yield of 2.77% and the S&P 500's yield of 1.3%.
In terms of dividend growth, the company's current annualized dividend of $1.32 is up 0.8% from last year. In the past five-year period, UGI has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.13%. 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. UGI's current payout ratio is 42%, meaning it paid out 42% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, UGI expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $3 per share, with earnings expected to increase 12.36% 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. 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, UGI presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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