All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
TIM S.A. Sponsored ADR in Focus
Based in Rio De Janeiro, TIM S.A. Sponsored ADR (TIMB) is in the Computer and Technology sector, and so far this year, shares have seen a price change of 44.3%. The company is currently shelling out a dividend of $0.46 per share, with a dividend yield of 5.04%. This compares to the Wireless Non-US industry's yield of 2.56% and the S&P 500's yield of 1.6%.
Looking at dividend growth, the company's current annualized dividend of $0.86 is up 54.7% from last year. Over the last 5 years, TIM S.A. Sponsored ADR has increased its dividend 2 times on a year-over-year basis for an average annual increase of 9.28%. 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. TIM's current payout ratio is 18%. This means it paid out 18% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, TIMB expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $1.34 per share, with earnings expected to increase 10.74% from the year ago period.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that TIMB is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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TIM S.A. Sponsored ADR (TIMB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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