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.
Pitney Bowes (PBI) is headquartered in Stamford, and is in the Computer and Technology sector. The stock has seen a price change of 61.6% since the start of the year. The mailing equipment and software company is paying out a dividend of $0.07 per share at the moment, with a dividend yield of 2.39% compared to the Office Automation and Equipment industry's yield of 2.54% and the S&P 500's yield of 1.55%.
Looking at dividend growth, the company's current annualized dividend of $0.28 is up 40% from last year. Over the last 5 years, Pitney Bowes has increased its dividend 1 times on a year-over-year basis for an average annual increase of 2.90%. 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. Pitney Bowes's current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PBI expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $1.25 per share, representing a year-over-year earnings growth rate of 52.44%.
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.
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. With that in mind, PBI 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).
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
Pitney Bowes Inc. (PBI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
