This is Why Huntsman (HUN) is a Great Dividend Stock
Dividends are one of the best benefits to being a shareholder, but finding a great dividend stock is no easy task. Does Huntsman (HUN) have what it ta...
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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Huntsman in Focus
Based in The Woodlands, Huntsman (HUN) is in the Basic Materials sector, and so far this year, shares have seen a price change of 1.31%. The chemical company is currently shelling out a dividend of $0.19 per share, with a dividend yield of 2.94%. This compares to the Chemical - Diversified industry's yield of 1.51% and the S&P 500's yield of 1.36%.
In terms of dividend growth, the company's current annualized dividend of $0.75 is up 15.4% from last year. In the past five-year period, Huntsman has increased its dividend 2 times on a year-over-year basis for an average annual increase of 7.73%. 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. Huntsman's current payout ratio is 32%. This means it paid out 32% of its trailing 12-month EPS as dividend.
HUN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $3.14 per share, representing a year-over-year earnings growth rate of 220.41%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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, HUN 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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Huntsman Corporation (HUN): Free Stock Analysis Report
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