HNI (HNI) 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. However, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Based in Muscatine, HNI (HNI) is in the Business Services sector, and so far this year, shares have seen a price change of -12.11%. The maker of office furniture and fireplaces is paying out a dividend of $0.34 per share at the moment, with a dividend yield of 3.07% compared to the Business - Office Products industry's yield of 2.52% and the S&P 500's yield of 1.48%.

Looking at dividend growth, the company's current annualized dividend of $1.36 is up 3.8% from last year. Over the last 5 years, HNI has increased its dividend 4 times on a year-over-year basis for an average annual increase of 2.00%. 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. HNI's current payout ratio is 39%, meaning it paid out 39% of its trailing 12-month EPS as dividend.

HNI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $3.55 per share, with earnings expected to increase 16.01% from the year ago period.

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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. That said, they can take comfort from the fact that HNI is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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).

Zacks Investment Research

Source Zacks-com