Yahoo Finance Why Astrazeneca (AZN) 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. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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.
Astrazeneca in Focus
Headquartered in Cambridge, Astrazeneca (AZN) is a Medical stock that has seen a price change of 17.57% so far this year. Currently paying a dividend of $0.96 per share, the company has a dividend yield of 2.44%. In comparison, the Large Cap Pharmaceuticals industry's yield is 2.44%, while the S&P 500's yield is 1.58%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.93 is up 35.9% from last year. In the past five-year period, Astrazeneca has increased its dividend 1 times on a year-over-year basis for an average annual increase of 1.06%. 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. Right now, Astrazeneca's payout ratio is 52%, which means it paid out 52% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AZN expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $4.04 per share, representing a year-over-year earnings growth rate of 11.29%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. 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, AZN 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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AstraZeneca PLC (AZN) : Free Stock Analysis Report
