Yahoo Finance Genuine Parts (GPC) Could Be a Great Choice
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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Genuine Parts in Focus
Headquartered in Atlanta, Genuine Parts (GPC) is an Auto-Tires-Trucks stock that has seen a price change of 16.82% so far this year. The auto and industrial parts distributor is currently shelling out a dividend of $1 per share, with a dividend yield of 2.47%. This compares to the Automotive - Replacement Parts industry's yield of 2.44% and the S&P 500's yield of 1.59%.
Taking a look at the company's dividend growth, its current annualized dividend of $4 is up 5.3% from last year. Over the last 5 years, Genuine Parts has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6%. 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. Right now, Genuine Parts's payout ratio is 43%, which means it paid out 43% of its trailing 12-month EPS as dividend.
GPC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $9.84 per share, with earnings expected to increase 5.47% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. That said, they can take comfort from the fact that GPC 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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Genuine Parts Company (GPC) : Free Stock Analysis Report
