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 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.
Enel Chile in Focus
Headquartered in Santiago, Enel Chile (ENIC) is a Utilities stock that has seen a price change of 14.93% so far this year. Currently paying a dividend of $0.04 per share, the company has a dividend yield of 6.76%. In comparison, the Utility - Electric Power industry's yield is 3.22%, while the S&P 500's yield is 1.54%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.22 is up 5.8% from last year. Enel Chile has increased its dividend 1 times on a year-over-year basis over the last 5 years for an average annual increase of 79.14%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Enel Chile's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, ENIC expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $0.34 per share, with earnings expected to increase 183.33% from the year ago period.
Bottom Line
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, ENIC presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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