Yahoo Finance Honeywell International Inc. (HON) is a Top Dividend Stock Right Now: Should You Buy?
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 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.
Honeywell International Inc. In Focus
Honeywell International Inc. (HON) is headquartered in Charlotte, and is in the Conglomerates sector. The stock has seen a price change of -7.67% since the start of the year. The company is paying out a dividend of $1.03 per share at the moment, with a dividend yield of 2.08% compared to the Diversified Operations industry's yield of 0.17% and the S&P 500's yield of 1.71%.
Looking at dividend growth, the company's current annualized dividend of $4.12 is up 3.8% from last year. In the past five-year period, Honeywell International Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.44%. 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. Honeywell International Inc.'s current payout ratio is 47%. This means it paid out 47% of its trailing 12-month EPS as dividend.
HON is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $9.03 per share, representing a year-over-year earnings growth rate of 3.08%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HON 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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Honeywell International Inc. (HON) : Free Stock Analysis Report
