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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, 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 that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
Portland General Electric in Focus
Based in Portland, Portland General Electric (POR) is in the Utilities sector, and so far this year, shares have seen a price change of 12.91%. The electric utility is paying out a dividend of $0.43 per share at the moment, with a dividend yield of 3.56% compared to the Utility - Electric Power industry's yield of 3.39% and the S&P 500's yield of 1.42%.
Looking at dividend growth, the company's current annualized dividend of $1.72 is up 8.5% from last year. Portland General Electric has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 6.13%. 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, Portland General Electric's payout ratio is 59%, which means it paid out 59% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for POR for this fiscal year. The Zacks Consensus Estimate for 2021 is $2.76 per share, with earnings expected to increase 60.47% 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. However, not all companies offer 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. 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, POR 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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Portland General Electric Company (POR) : Free Stock Analysis Report
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