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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
China Petro&Chm in Focus
Headquartered in Beijing, China Petro&Chm (SNP) is an Oils-Energy stock that has seen a price change of 14.62% so far this year. The energy and chemical company is paying out a dividend of $2.2 per share at the moment, with a dividend yield of 8.61% compared to the Oil and Gas - Integrated - Emerging Markets industry's yield of 5.69% and the S&P 500's yield of 1.42%.
Taking a look at the company's dividend growth, its current annualized dividend of $4.40 is up 4.5% from last year. China Petro&Chm has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 11.73%. 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, China Petro&Chm's payout ratio is 44%, which means it paid out 44% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for SNP for this fiscal year. The Zacks Consensus Estimate for 2021 is $8.92 per share, which represents a year-over-year growth rate of 115.98%.
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, SNP 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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China Petroleum & Chemical Corporation (SNP) : Free Stock Analysis Report
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