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.
Artesian Resources in Focus
Headquartered in Newark, Artesian Resources (ARTNA) is a Utilities stock that has seen a price change of -2.12% so far this year. The water resource management company is currently shelling out a dividend of $0.25 per share, with a dividend yield of 2.74%. This compares to the Utility - Water Supply industry's yield of 2.15% and the S&P 500's yield of 2.13%.
In terms of dividend growth, the company's current annualized dividend of $1 is up 1.6% from last year. In the past five-year period, Artesian Resources has increased its dividend 5 times on a year-over-year basis for an average annual increase of 3%. 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. Artesian Resources's current payout ratio is 60%, meaning it paid out 60% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for ARTNA for this fiscal year. The Zacks Consensus Estimate for 2020 is $1.68 per share, with earnings expected to increase 5% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, ARTNA 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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Artesian Resources Corporation (ARTNA) : Free Stock Analysis Report
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