Yahoo Finance Why Avient (AVNT) 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Avient in Focus
Based in Avon Lake, Avient (AVNT) is in the Basic Materials sector, and so far this year, shares have seen a price change of 5.7%. The maker of resins used in plastic pipe and other products is paying out a dividend of $0.26 per share at the moment, with a dividend yield of 2.34% compared to the Chemical - Diversified industry's yield of 1.79% and the S&P 500's yield of 1.6%.
Looking at dividend growth, the company's current annualized dividend of $1.03 is up 3% from last year. In the past five-year period, Avient has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.65%. 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, Avient's payout ratio is 44%, which means it paid out 44% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for AVNT for this fiscal year. The Zacks Consensus Estimate for 2024 is $2.55 per share, which represents a year-over-year growth rate of 8.05%.
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. It's important to keep in mind that not all companies provide 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, AVNT presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Avient Corporation (AVNT) : Free Stock Analysis Report
