Pitney Bowes (PBI) 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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

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.

Headquartered in Shelton , Pitney Bowes (PBI) is a Computer and Technology stock that has seen a price change of 63.86% so far this year. The mailing equipment and software company is paying out a dividend of $0.10 per share at the moment, with a dividend yield of 2.31% compared to the Office Automation and Equipment industry's yield of 0.89% and the S&P 500's yield of 1.41%.

Looking at dividend growth, the company's current annualized dividend of $0.40 is up 33.3% from last year. Over the last 5 years, Pitney Bowes has increased its dividend 1 times on a year-over-year basis for an average annual increase of 2.90%. 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. Pitney Bowes's current payout ratio is 24%, meaning it paid out 24% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, PBI expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $1.62 per share, with earnings expected to increase 20.00% 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. But, not every company offers a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful 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 PBI is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).

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

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