Why Avient (AVNT) is a Great Dividend Stock Right Now

Avient (AVNT), a basic materials company, is highlighted as a compelling income investment due to its robust dividend profile. The stock currently yields 2.29%, outperforming its industry and the S&P 500, supported by a consistent 6.56% average annual dividend growth over five years and a sustainable 39% payout ratio. This strong dividend outlook is further bolstered by a projected 12.29% earnings growth for fiscal year 2024, positioning AVNT as an attractive option for income-focused portfolios, despite its current Zacks Rank of 3 (Hold).

Analysis

Avient (AVNT), a basic materials company, presents a compelling profile for income-oriented investors based on its dividend metrics and earnings outlook. The company's current dividend yield of 2.29% surpasses both its Chemical - Diversified industry peer average of 1.92% and the S&P 500's 1.58%. This yield is supported by a consistent history of dividend growth, evidenced by five increases over the past five years for an average annual increase of 6.56%, and a recent 3% year-over-year hike in its annualized dividend to $1.03. The dividend appears sustainable, with a current payout ratio of 39% of trailing twelve-month earnings. This financial discipline is complemented by a strong forward-looking earnings forecast, with the Zacks Consensus Estimate for fiscal 2024 pointing to a 12.29% year-over-year growth in EPS to $2.65. While these factors are positive, the stock currently holds a Zacks Rank of 3 (Hold), suggesting it may be fairly valued and tempering the otherwise bullish fundamental picture.

Key Decisions for Investors

• Income-focused investors may find AVNT attractive for its above-average and historically growing dividend, which appears well-supported by a sustainable 39% payout ratio.
• Investors should monitor for continued execution towards the projected 12.29% earnings growth in 2024, as this is the primary catalyst for future dividend growth and potential capital appreciation.
• The neutral 'Hold' rating from Zacks warrants consideration, suggesting that while fundamentals are solid, the stock might be fairly valued at its current price, and portfolios should remain aware of the broader risk that rising interest rates pose to high-yield equities.