All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.
TotalEnergies SE Sponsored ADR in Focus
Headquartered in Paris, TotalEnergies SE Sponsored ADR (TTE) is an Oils-Energy stock that has seen a price change of -2.07% so far this year. Currently paying a dividend of $0.61 per share, the company has a dividend yield of 4.73%. In comparison, the Oil and Gas - Refining and Marketing industry's yield is 4.25%, while the S&P 500's yield is 1.78%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.52 is up 2.5% from last year. Over the last 5 years, TotalEnergies SE Sponsored ADR has increased its dividend 3 times on a year-over-year basis for an average annual increase of 1.07%. 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. TotalEnergies's current payout ratio is 31%. This means it paid out 31% of its trailing 12-month EPS as dividend.
TTE is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $8.24 per share, which represents a year-over-year growth rate of 6.05%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. 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, TTE 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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TotalEnergies SE Sponsored ADR (TTE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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