Why Lenovo Group Ltd. (LNVGY) is a Top Dividend Stock for Your Portfolio
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.
Lenovo Group Ltd. In Focus
Headquartered in Hong Kong, Lenovo Group Ltd. (LNVGY) is a Computer and Technology stock that has seen a price change of -6.26% so far this year. The company is paying out a dividend of $0.75 per share at the moment, with a dividend yield of 5.72% compared to the Computer - Micro Computers industry's yield of 2.34% and the S&P 500's yield of 1.55%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.50 is up 61.1% from last year. Over the last 5 years, Lenovo Group Ltd. has increased its dividend 4 times on a year-over-year basis for an average annual increase of 1.88%. 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. Lenovo Group's current payout ratio is 22%. This means it paid out 22% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for LNVGY for this fiscal year. The Zacks Consensus Estimate for 2024 is $1.88 per share, with earnings expected to increase 16.77% 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. But, not every company offers 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, LNVGY 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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Lenovo Group Ltd. (LNVGY) : Free Stock Analysis Report