Whether it’s through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
DuPont de Nemours in Focus
Based in Wilmington, DuPont de Nemours (DD – Free Report) is in the Basic Materials sector, and so far this year, shares have seen a price change of -24.38%. Currently paying a dividend of $0.41 per share, the company has a dividend yield of 2.84%. In comparison, the Chemical – Diversified industry’s yield is 2.65%, while the S&P 500’s yield is 1.7%.
Looking at dividend growth, the company’s current annualized dividend of $1.64 is up 7.9% from last year. Over the last 5 years, DuPont de Nemours has increased its dividend 4 times on a year-over-year basis for an average annual increase of 7.09%. 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. DuPont de Nemours’s current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for DD for this fiscal year. The Zacks Consensus Estimate for 2025 is $4.38 per share, with earnings expected to increase 7.62% 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, DD 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).
Financial Market Newsflash
No financial news published today. Check back later.
