Whirlpool (WHR) is a Top Dividend Stock Right Now: Should You Buy?

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, 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 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.

Whirlpool in Focus

Headquartered in Benton Harbor, Whirlpool (WHR) is a Consumer Discretionary stock that has seen a price change of -9.26% so far this year. The maker of Maytag, KitchenAid and other appliances is currently shelling out a dividend of $1.2 per share, with a dividend yield of 3.59%. This compares to the Household Appliances industry's yield of 1.24% and the S&P 500's yield of 1.98%.

Taking a look at the company's dividend growth, its current annualized dividend of $4.80 is up 1.1% from last year. Over the last 5 years, Whirlpool has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.46%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Whirlpool's current payout ratio is 30%. This means it paid out 30% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for WHR for this fiscal year. The Zacks Consensus Estimate for 2020 is $16.30 per share, with earnings expected to increase 1.88% from the year ago period.

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. It's important to keep in mind that not all companies provide 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, WHR 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).

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