Yahoo Finance Why Astrazeneca (AZN) is a Top Dividend Stock for Your Portfolio
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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.
Astrazeneca in Focus
Astrazeneca (AZN) is headquartered in Cambridge, and is in the Medical sector. The stock has seen a price change of 8.7% since the start of the year. The pharmaceutical is paying out a dividend of $0.96 per share at the moment, with a dividend yield of 2.62% compared to the Large Cap Pharmaceuticals industry's yield of 2.28% and the S&P 500's yield of 1.73%.
In terms of dividend growth, the company's current annualized dividend of $1.93 is up 35.9% from last year. In the past five-year period, Astrazeneca has increased its dividend 2 times on a year-over-year basis for an average annual increase of 4.79%. 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. Astrazeneca's current payout ratio is 58%. This means it paid out 58% of its trailing 12-month EPS as dividend.
AZN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $3.66 per share, representing a year-over-year earnings growth rate of 9.91%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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, AZN 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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AstraZeneca PLC (AZN) : Free Stock Analysis Report
