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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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Kronos Worldwide in Focus
Kronos Worldwide (KRO) is headquartered in Dallas, and is in the Basic Materials sector. The stock has seen a price change of 25.65% since the start of the year. The maker of titanium dioxide pigments is paying out a dividend of $0.19 per share at the moment, with a dividend yield of 4.03% compared to the Chemical - Diversified industry's yield of 2% and the S&P 500's yield of 1.72%.
Looking at dividend growth, the company's current annualized dividend of $0.76 is up 5.6% from last year. Over the last 5 years, Kronos Worldwide has increased its dividend 3 times on a year-over-year basis for an average annual increase of 3.87%. 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. Kronos Worldwide's current payout ratio is 58%, meaning it paid out 58% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for KRO for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.06 per share, which represents a year-over-year growth rate of 110.20%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that KRO 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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Kronos Worldwide Inc (KRO) : Free Stock Analysis Report
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