Why Boeing (BA) is a Great Dividend Stock Right Now
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Boeing in Focus
Boeing (BA) is headquartered in Chicago, and is in the Aerospace sector. The stock has seen a price change of 16.03% since the start of the year. Currently paying a dividend of $2.06 per share, the company has a dividend yield of 2.2%. In comparison, the Aerospace - Defense industry's yield is 0.91%, while the S&P 500's yield is 1.98%.
In terms of dividend growth, the company's current annualized dividend of $8.22 is up 20.2% from last year. Boeing has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 22.96%. 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. Boeing's current payout ratio is 43%, meaning it paid out 43% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BA expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $20.08 per share, representing a year-over-year earnings growth rate of 25.42%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that BA is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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