Unitil (UTL) 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.

Cash flow can come from bond interest, interest from other types of investments, and, of course, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Unitil (UTL) is headquartered in Hampton, and is in the Utilities sector. The stock has seen a price change of -13.73% since the start of the year. Currently paying a dividend of $0.45 per share, the company has a dividend yield of 3.85%. In comparison, the Utility - Electric Power industry's yield is 3.15%, while the S&P 500's yield is 1.47%.

Looking at dividend growth, the company's current annualized dividend of $1.80 is up 5.9% from last year. Over the last 5 years, Unitil has increased its dividend 5 times on a year-over-year basis for an average annual increase of 3.84%. 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. Unitil's current payout ratio is 60%, meaning it paid out 60% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for UTL for this fiscal year. The Zacks Consensus Estimate for 2025 is $3.08 per share, which represents a year-over-year growth rate of 3.70%.

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.

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, UTL 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