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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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 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
Based in Chicago, First Industrial Realty Trust (FR) is in the Finance sector, and so far this year, shares have seen a price change of 2.99%. The real estate investment trust is paying out a dividend of $0.25 per share at the moment, with a dividend yield of 2.34% compared to the REIT and Equity Trust - Other industry's yield of 3.88% and the S&P 500's yield of 1.65%.
Taking a look at the company's dividend growth, its current annualized dividend of $1 is up 8.7% from last year. Over the last 5 years, First Industrial Realty Trust has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.76%. 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 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, with earnings expected to increase 3.45% from the year ago period.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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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First Industrial Realty Trust, Inc. (FR) : Free Stock Analysis Report
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