Why Targa Resources, Inc. (TRGP) is a Great Dividend Stock Right Now

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.Cash flow can come from bond interest, interest from other types of investments, and, of course, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.Targa Resources, Inc. (TRGP) is headquartered in Houston, and is in the Oils-Energy sector. The stock has seen a price change of 35.23% since the start of the year. The company is currently shelling out a dividend of $1.25 per share, with a dividend yield of 2%. This compares to the Oil and Gas - Refining and Marketing - Master Limited Partnerships industry's yield of 5.83% and the S&P 500's yield of 1.41%.Looking at dividend growth, the company's current annualized dividend of $5.00 is up 33.3% from last year. Over the last 5 years, Targa Resources, Inc. has increased its dividend 4 times on a year-over-year basis for an average annual increase of 69.99%. 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. Targa Resources's current payout ratio is 47%, meaning it paid out 47% of its trailing 12-month EPS as dividend.TRGP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $10.32 per share, with earnings expected to increase 21.55% 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.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. With that in mind, TRGP 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).Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.See Stocks Now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks