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.
Bemis in Focus
Bemis (BMS) is headquartered in Neenah, and is in the Industrial Products sector. The stock has seen a price change of 19.5% since the start of the year. The packaging company is paying out a dividend of $0.32 per share at the moment, with a dividend yield of 2.33% compared to the Containers - Paper and Packaging industry's yield of 2.44% and the S&P 500's yield of 1.97%.
Looking at dividend growth, the company's current annualized dividend of $1.28 is up 3.2% from last year. Over the last 5 years, Bemis has increased its dividend 5 times on a year-over-year basis for an average annual increase of 3.38%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Bemis's payout ratio is 44%, which means it paid out 44% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BMS expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $2.99 per share, with earnings expected to increase 7.17% 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. 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, BMS 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).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Bemis Company, Inc. (BMS) : Free Stock Analysis Report
To read this article on Zacks.com click here.