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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.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
Telekom Austria AG in Focus
Based in Vienna, Telekom Austria AG (TKAGY) is in the Utilities sector, and so far this year, shares have seen a price change of 15.09%. The company is paying out a dividend of $0.59 per share at the moment, with a dividend yield of 3.24% compared to the Diversified Communication Services industry's yield of 1.13% and the S&P 500's yield of 1.35%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.59 is up 13.2% from last year. Telekom Austria AG has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 31.55%. 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. Telekom Austria AG's current payout ratio is 39%, meaning it paid out 39% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for TKAGY for this fiscal year. The Zacks Consensus Estimate for 2021 is $1.50 per share, with earnings expected to increase 13.64% from the year ago period.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, TKAGY 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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Telekom Austria AG (TKAGY) : Free Stock Analysis Report
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