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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
HNI (HNI) is headquartered in Muscatine, and is in the Business Services sector. The stock has seen a price change of 2.9% since the start of the year. Currently paying a dividend of $0.34 per share, the company has a dividend yield of 2.62%. In comparison, the Business - Office Products industry's yield is 2.6%, while the S&P 500's yield is 1.48%.
Looking at dividend growth, the company's current annualized dividend of $1.36 is up 3.8% from last year. Over the last 5 years, HNI has increased its dividend 4 times on a year-over-year basis for an average annual increase of 2.00%. 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. HNI's current payout ratio is 39%, meaning it paid out 39% of its trailing 12-month EPS as dividend.
HNI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $3.55 per share, with earnings expected to increase 16.01% from the year ago period.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HNI presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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HNI Corporation (HNI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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