Why Portland General Electric (POR) is a Top Dividend Stock for Your Portfolio
Dividends are one of the best benefits to being a shareholder, but finding a great dividend stock is no easy task. Does Portland General Electric (POR...
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
Portland General Electric in Focus
Based in Portland, Portland General Electric (POR) is in the Utilities sector, and so far this year, shares have seen a price change of 20.22%. The electric utility is currently shelling out a dividend of $0.43 per share, with a dividend yield of 3.35%. This compares to the Utility - Electric Power industry's yield of 3.15% and the S&P 500's yield of 1.36%.
In terms of dividend growth, the company's current annualized dividend of $1.72 is up 8.5% from last year. Over the last 5 years, Portland General Electric has increased its dividend 4 times on a year-over-year basis for an average annual increase of 6.05%. 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. Portland General Electric's current payout ratio is 59%, meaning it paid out 59% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for POR for this fiscal year. The Zacks Consensus Estimate for 2021 is $2.76 per share, which represents a year-over-year growth rate of 60.47%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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 have to be mindful 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 POR is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Portland General Electric Company (POR): Free Stock Analysis Report
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