Are you looking for a high growth dividend stock? Huntington Ingalls (HII) could be a great choice
Whether through stocks, bonds, ETFs or other types of securities, all investors love to see their portfolios generate big returns. However, when you are an income investor, your primary goal is to generate consistent cash flow from each of your liquid investments.
Cash flow can come from interest on bonds, interest from other types of investments and, of course, dividends. A dividend is the coveted distribution of a company’s profits paid to shareholders, and investors often perceive it through its dividend yield, a measure that measures the dividend as a percentage of the current stock price. Numerous academic studies show that dividends are a large part of long-term returns, and in many cases dividend contributions exceed one-third of total returns.
Huntington Ingalls in brief
Newport News-based Huntington Ingalls (HII) is an aerospace stock that has seen a 26.82% price change so far this year. The shipbuilder is currently paying out a dividend of $ 1.14 per share, with a dividend yield of 2.11%. This compares to the Aerospace – Defense industry return of 0.06% and the S&P 500 return of 1.29%.
When it comes to dividend growth, the company’s current annualized dividend of $ 4.56 is up 7.8% from last year. In the last five years, Huntington Ingalls has increased its dividend 5 times on an annual basis for an average annual increase of 19.22%. Any future dividend growth will depend on both earnings growth and the payout ratio of the company; a payout ratio is the proportion of a company’s annual earnings per share that it pays out as a dividend. Currently, Huntington Ingalls’ payout ratio is 31%, which means he paid 31% of his 12-month EPS as a dividend.
Looking at this fiscal year, HII expects solid earnings growth. Zacks’ consensus estimate for 2021 is $ 12.80 per share, with earnings expected to rise 28% from a year ago.
At the end of the line
Investors love dividends for many reasons; they dramatically improve returns on stock market investments, reduce overall portfolio risk, and provide tax benefits, among other things. It’s important to keep in mind that not all companies offer quarterly payouts.
High growth companies or tech start-ups, for example, rarely deliver a dividend to their shareholders, while larger, more established companies that make safer profits are often seen as the best dividend options. Income investors should be aware that high yielding stocks tend to struggle during times of rising interest rates. With that in mind, HII is a compelling investment opportunity. Not only is it a strong dividend game, but the title currently sits at a Zacks rank of 3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report