- Oops!Something went wrong.Please try again later.
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.
Sonoco in Focus
Sonoco (SON) is headquartered in Hartsville, and is in the Industrial Products sector. The stock has seen a price change of 13.89% since the start of the year. The packaging maker is paying out a dividend of $0.45 per share at the moment, with a dividend yield of 2.67% compared to the Containers - Paper and Packaging industry's yield of 1.79% and the S&P 500's yield of 1.31%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.80 is up 4.7% from last year. Sonoco has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 4.17%. 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. Right now, Sonoco's payout ratio is 53%, which means it paid out 53% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for SON for this fiscal year. The Zacks Consensus Estimate for 2021 is $3.59 per share, with earnings expected to increase 5.28% 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.
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, SON presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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
Sonoco Products Company (SON) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research