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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Pitney Bowes in Focus
Based in Stamford, Pitney Bowes (PBI) is in the Computer and Technology sector, and so far this year, shares have seen a price change of 14.78%. The mailing equipment and software company is currently shelling out a dividend of $0.06 per share, with a dividend yield of 2.89%. This compares to the Office Automation and Equipment industry's yield of 2.48% and the S&P 500's yield of 1.67%.
Looking at dividend growth, the company's current annualized dividend of $0.24 is up 20% from last year. In the past five-year period, Pitney Bowes has increased its dividend 1 times on a year-over-year basis for an average annual increase of 1.05%. 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. Right now, Pitney Bowes's payout ratio is 36%, which means it paid out 36% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PBI for this fiscal year. The Zacks Consensus Estimate for 2025 is $1.21 per share, with earnings expected to increase 47.56% 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. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their 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, PBI 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).
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
