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First Industrial Realty Trust (FR) is a Top Dividend Stock Right Now: Should You Buy?

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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

First Industrial Realty Trust in Focus

Headquartered in Chicago, First Industrial Realty Trust (FR) is a Finance stock that has seen a price change of 26.54% so far this year. The real estate investment trust is currently shelling out a dividend of $0.27 per share, with a dividend yield of 2.03%. This compares to the REIT and Equity Trust - Other industry's yield of 2.97% and the S&P 500's yield of 1.3%.

In terms of dividend growth, the company's current annualized dividend of $1.08 is up 8% from last year. First Industrial Realty Trust has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 6.69%. 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. First Industrial Realty Trust's current payout ratio is 58%, meaning it paid out 58% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, FR expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $1.91 per share, representing a year-over-year earnings growth rate of 3.80%.

Bottom Line

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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, FR 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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