Avnet (AVT) Could Be a Great Choice
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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Headquartered in Phoenix, Avnet (AVT) is a Computer and Technology stock that has seen a price change of 39.41% so far this year. The distributor of electronic components is paying out a dividend of $0.35 per share at the moment, with a dividend yield of 2.09% compared to the Electronics - Parts Distribution industry's yield of 0.72% and the S&P 500's yield of 1.41%.
Looking at dividend growth, the company's current annualized dividend of $1.40 is up 6.1% from last year. Over the last 5 years, Avnet has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.29%. 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. Avnet's current payout ratio is 40%, meaning it paid out 40% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for AVT for this fiscal year. The Zacks Consensus Estimate for 2026 is $4.62 per share, which represents a year-over-year growth rate of 34.30%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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, AVT 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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Avnet, Inc. (AVT): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Source Zacks-com
