Avient (AVNT) Could Be a Great Choice

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.

Based in Avon Lake, Avient (AVNT) is in the Basic Materials sector, and so far this year, shares have seen a price change of 19.88%. The maker of resins used in plastic pipe and other products is paying out a dividend of $0.28 per share at the moment, with a dividend yield of 2.94% compared to the Chemical - Diversified industry's yield of 1.62% and the S&P 500's yield of 1.4%.

Looking at dividend growth, the company's current annualized dividend of $1.10 is up 1.4% from last year. Over the last 5 years, Avient has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.00%. 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. Avient's current payout ratio is 39%, meaning it paid out 39% of its trailing 12-month EPS as dividend.

AVNT is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $3.06 per share, which represents a year-over-year growth rate of 8.51%.

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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. With that in mind, AVNT 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).

Zacks Names #1 Semiconductor Stock

This under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.

With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.

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This article originally published on Zacks Investment Research (zacks.com).

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Source Zacks-com