Yahoo Finance Why Cenovus Energy (CVE) is a Great Dividend Stock Right Now
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 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.
Cenovus Energy in Focus
Based in Calgary, Cenovus Energy (CVE) is in the Oils-Energy sector, and so far this year, shares have seen a price change of 15.14%. Currently paying a dividend of $0.2 per share, the company has a dividend yield of 2.04%. In comparison, the Oil and Gas - Integrated - Canadian industry's yield is 4.16%, while the S&P 500's yield is 1.58%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.39 is up 0.8% from last year. Over the last 5 years, Cenovus Energy has increased its dividend 4 times on a year-over-year basis for an average annual increase of 35.17%. 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. Cenovus's current payout ratio is 23%, meaning it paid out 23% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CVE expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $2.05 per share, representing a year-over-year earnings growth rate of 30.57%.
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. However, not all companies offer 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, CVE 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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Cenovus Energy Inc (CVE) : Free Stock Analysis Report
