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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.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Equity Lifestyle Properties in Focus
Based in Chicago, Equity Lifestyle Properties (ELS) is in the Finance sector, and so far this year, shares have seen a price change of -10.37%. The resort community operator is currently shelling out a dividend of $0.41 per share, with a dividend yield of 2.09%. This compares to the REIT and Equity Trust - Residential industry's yield of 2.49% and the S&P 500's yield of 1.46%.
In terms of dividend growth, the company's current annualized dividend of $1.64 is up 13.1% from last year. In the past five-year period, Equity Lifestyle Properties has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.64%. 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. Equity Lifestyle Properties's current payout ratio is 57%. This means it paid out 57% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, ELS expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $2.74 per share, which represents a year-over-year growth rate of 8.30%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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 their 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, ELS 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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Equity Lifestyle Properties, Inc. (ELS) : Free Stock Analysis Report
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