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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. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
EastGroup Properties in Focus
EastGroup Properties (EGP) is headquartered in Ridgeland, and is in the Finance sector. The stock has seen a price change of -11.77% since the start of the year. Currently paying a dividend of $0.75 per share, the company has a dividend yield of 2.56%. In comparison, the REIT and Equity Trust - Other industry's yield is 4.2%, while the S&P 500's yield is 1.97%.
In terms of dividend growth, the company's current annualized dividend of $3 is up 2% from last year. In the past five-year period, EastGroup Properties has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6%. 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. EastGroup Properties's current payout ratio is 59%. This means it paid out 59% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for EGP for this fiscal year. The Zacks Consensus Estimate for 2020 is $5.17 per share, which represents a year-over-year growth rate of 3.82%.
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.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, EGP 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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EastGroup Properties, Inc. (EGP) : Free Stock Analysis Report
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