Yahoo Finance Unitil (UTL) Could Be a Great Choice
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Unitil in Focus
Headquartered in Hampton, Unitil (UTL) is a Utilities stock that has seen a price change of -1.65% so far this year. Currently paying a dividend of $0.43 per share, the company has a dividend yield of 3.29%. In comparison, the Utility - Electric Power industry's yield is 3.51%, while the S&P 500's yield is 1.58%.
Looking at dividend growth, the company's current annualized dividend of $1.70 is up 4.9% from last year. Over the last 5 years, Unitil has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.50%. 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. Right now, Unitil's payout ratio is 57%, which means it paid out 57% of its trailing 12-month EPS as dividend.
UTL is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $2.92 per share, representing a year-over-year earnings growth rate of 3.55%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer 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. With that in mind, UTL 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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Unitil Corporation (UTL) : Free Stock Analysis Report
