Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Boston Properties in Focus
Based in Boston, Boston Properties (BXP) is in the Finance sector, and so far this year, shares have seen a price change of 12.3%. The real estate investment trust is currently shelling out a dividend of $0.95 per share, with a dividend yield of 3.01%. This compares to the REIT and Equity Trust - Other industry's yield of 4.54% and the S&P 500's yield of 1.98%.
In terms of dividend growth, the company's current annualized dividend of $3.80 is up 8.6% from last year. In the past five-year period, Boston Properties has increased its dividend 3 times on a year-over-year basis for an average annual increase of 7.87%. 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. Boston Properties's current payout ratio is 61%. This means it paid out 61% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BXP for this fiscal year. The Zacks Consensus Estimate for 2019 is $6.84 per share, which represents a year-over-year growth rate of 8.57%.
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.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, BXP 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).
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Boston Properties, Inc. (BXP) : Free Stock Analysis Report
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