Why DHT Holdings (DHT) is a Top Dividend Stock for Your Portfolio
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
DHT Holdings in Focus
Headquartered in Hamilton, DHT Holdings (DHT) is a Transportation stock that has seen a price change of 35.7% so far this year. The independent oil tanker company is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 12.61% compared to the Transportation - Shipping industry's yield of 1.19% and the S&P 500's yield of 1.6%.
Looking at dividend growth, the company's current annualized dividend of $1.52 is up 1166.7% from last year. In the past five-year period, DHT Holdings has increased its dividend 3 times on a year-over-year basis for an average annual increase of 1.87%. 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. DHT Holdings's current payout ratio is 52%. This means it paid out 52% of its trailing 12-month EPS as dividend.
DHT is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $1.09 per share, representing a year-over-year earnings growth rate of 275.86%.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, DHT 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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