Are You Looking for a High-Growth Dividend Stock?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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.
Edison International in Focus
Headquartered in Rosemead, Edison International (EIX) is a Utilities stock that has seen a price change of 3.52% so far this year. Currently paying a dividend of $0.74 per share, the company has a dividend yield of 4.48%. In comparison, the Utility - Electric Power industry's yield is 3.15%, while the S&P 500's yield is 1.6%.
In terms of dividend growth, the company's current annualized dividend of $2.95 is up 4% from last year. Over the last 5 years, Edison International has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.05%. 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. Edison International's current payout ratio is 60%. This means it paid out 60% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EIX expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $4.74 per share, representing a year-over-year earnings growth rate of 2.60%.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, EIX 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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Edison International (EIX) : Free Stock Analysis Report
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