Yahoo Finance Are You Looking for a High-Growth Dividend Stock?
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
PNM Resources in Focus
Headquartered in Albuquerque, PNM Resources (PNM) is a Utilities stock that has seen a price change of -6.5% so far this year. The power company is paying out a dividend of $0.37 per share at the moment, with a dividend yield of 3.22% compared to the Utility - Electric Power industry's yield of 3.42% and the S&P 500's yield of 1.81%.
Looking at dividend growth, the company's current annualized dividend of $1.47 is up 5.8% from last year. In the past five-year period, PNM Resources has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.74%. 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. PNM Resources's current payout ratio is 54%, meaning it paid out 54% of its trailing 12-month EPS as dividend.
PNM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $2.70 per share, which represents a year-over-year growth rate of 0.37%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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, PNM 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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PNM Resources, Inc. (PNM) : Free Stock Analysis Report
