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 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.
Headquartered in Miami, World Kinect (WKC) is a Oils-Energy stock that has seen a price change of -5.23% so far this year. The company that services ships, jets and trucks is paying out a dividend of $0.20 per share at the moment, with a dividend yield of 3.07% compared to the Oil and Gas - Refining and Marketing industry's yield of 2.81% and the S&P 500's yield of 1.5%.
Looking at dividend growth, the company's current annualized dividend of $0.80 is up 17.6% from last year. Over the last 5 years, World Kinect has increased its dividend 4 times on a year-over-year basis for an average annual increase of 13.04%. 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. World Kinect's current payout ratio is 35%, meaning it paid out 35% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for WKC for this fiscal year. The Zacks Consensus Estimate for 2025 is $2.25 per share, which represents a year-over-year growth rate of 3.21%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, WKC presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
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World Kinect Corporation (WKC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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