Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Based in Eden Prairie, Winnebago Industries (WGO) is in the Construction sector, and so far this year, shares have seen a price change of -23.52%. The recreational vehicle maker is currently shelling out a dividend of $0.34 per share, with a dividend yield of 3.72%. This compares to the Building Products - Mobile Homes and RV Builders industry's yield of 0.89% and the S&P 500's yield of 1.58%.
In terms of dividend growth, the company's current annualized dividend of $1.36 is up 9.7% from last year. In the past five-year period, Winnebago Industries has increased its dividend 5 times on a year-over-year basis for an average annual increase of 32.51%. 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, Winnebago's payout ratio is 59%, which means it paid out 59% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, WGO expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $3.41 per share, with earnings expected to increase 0.29% from the year ago period.
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.
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. That said, they can take comfort from the fact that WGO 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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Winnebago Industries, Inc. (WGO) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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