All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Bemis in Focus
Headquartered in Neenah, Bemis (BMS) is an Industrial Products stock that has seen a price change of 22.33% so far this year. The packaging company is currently shelling out a dividend of $0.32 per share, with a dividend yield of 2.28%. This compares to the Containers - Paper and Packaging industry's yield of 2.37% and the S&P 500's yield of 1.93%.
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 3.51%. 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. Bemis's current payout ratio is 44%, meaning it paid out 44% of its trailing 12-month EPS as dividend.
BMS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $2.99 per share, which represents a year-over-year growth rate of 7.17%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. 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).
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Bemis Company, Inc. (BMS) : Free Stock Analysis Report
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