World Fuel Services (INT) Could Be a Great Choice

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 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.

World Fuel Services in Focus

Headquartered in Miami, World Fuel Services (INT) is an Oils-Energy stock that has seen a price change of -7.52% so far this year. The company that services ships, jets and trucks is paying out a dividend of $0.14 per share at the moment, with a dividend yield of 2.29% compared to the Oil and Gas - Refining and Marketing industry's yield of 2.17% and the S&P 500's yield of 1.8%.

In terms of dividend growth, the company's current annualized dividend of $0.56 is up 16.7% from last year. World Fuel Services has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 20.65%. 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. Right now, World Fuel Services's payout ratio is 33%, which means it paid out 33% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for INT for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.03 per share, with earnings expected to increase 49.26% from the year ago period.

Bottom Line

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.

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. With that in mind, INT 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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