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

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Zacks Equity Research
·3 min read
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

First Industrial Realty Trust in Focus

First Industrial Realty Trust (FR) is headquartered in Chicago, and is in the Finance sector. The stock has seen a price change of 4.77% since the start of the year. The real estate investment trust is currently shelling out a dividend of $0.25 per share, with a dividend yield of 2.3%. This compares to the REIT and Equity Trust - Other industry's yield of 3.83% and the S&P 500's yield of 1.59%.

In terms of dividend growth, the company's current annualized dividend of $1 is up 8.7% 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 8.75%. 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. First Industrial Realty Trust's current payout ratio is 56%, meaning it paid out 56% of its trailing 12-month EPS as dividend.

FR is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $1.80 per share, which represents a year-over-year growth rate of 3.45%.

Bottom Line

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. 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, 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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