Yahoo Finance Are You Looking for a High-Growth Dividend Stock?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
PPG Industries in Focus
Headquartered in Pittsburgh, PPG Industries (PPG) is a Basic Materials stock that has seen a price change of -13.59% so far this year. The paint and coatings maker is paying out a dividend of $0.65 per share at the moment, with a dividend yield of 2.01% compared to the Chemical - Specialty industry's yield of 0.78% and the S&P 500's yield of 1.58%.
Looking at dividend growth, the company's current annualized dividend of $2.60 is up 2.4% from last year. Over the last 5 years, PPG Industries has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.56%. 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. PPG Industries's current payout ratio is 34%. This means it paid out 34% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PPG expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $8.45 per share, with earnings expected to increase 10.17% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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, PPG 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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PPG Industries, Inc. (PPG) : Free Stock Analysis Report
