You are using an older browser version. Please use a supported version for the best MSN experience.

Why Portland General Electric (POR) is a Great Dividend Stock Right Now

Zacks.com logo Zacks.com 4/12/2021

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.

Portland General Electric in Focus

Headquartered in Portland, Portland General Electric (POR) is a Utilities stock that has seen a price change of 14.15% so far this year. Currently paying a dividend of $0.41 per share, the company has a dividend yield of 3.34%. In comparison, the Utility - Electric Power industry's yield is 3%, while the S&P 500's yield is 1.33%.

In terms of dividend growth, the company's current annualized dividend of $1.63 is up 2.8% from last year. Over the last 5 years, Portland General Electric has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.79%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Portland General Electric's payout ratio is 58%, which means it paid out 58% of its trailing 12-month EPS as dividend.

POR is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $2.64 per share, representing a year-over-year earnings growth rate of 53.49%.

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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, POR 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).

AdChoices
AdChoices
AdChoices

More from Zacks.com

image beaconimage beaconimage beacon