Yahoo Finance Why Unitil (UTL) is a Great Dividend Stock Right Now
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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.
Unitil in Focus
Based in Hampton, Unitil (UTL) is in the Utilities sector, and so far this year, shares have seen a price change of 0.11%. The utility is currently shelling out a dividend of $0.43 per share, with a dividend yield of 3.23%. This compares to the Utility - Electric Power industry's yield of 3.61% and the S&P 500's yield of 1.61%.
Looking at dividend growth, the company's current annualized dividend of $1.70 is up 4.9% from last year. Unitil has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 2.50%. 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. Unitil's current payout ratio is 57%, meaning it paid out 57% of its trailing 12-month EPS as dividend.
UTL is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $2.92 per share, which represents a year-over-year growth rate of 3.55%.
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. It's important to keep in mind that not all companies provide 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. 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, UTL 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).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Unitil Corporation (UTL) : Free Stock Analysis Report
