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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 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 the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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
Headquartered in Ridgeland, EastGroup Properties (EGP) is a Finance stock that has seen a price change of 11.29% so far this year. The real estate investment trust is currently shelling out a dividend of $0.79 per share, with a dividend yield of 2.14%. This compares to the REIT and Equity Trust - Other industry's yield of 3.75% and the S&P 500's yield of 1.59%.
Taking a look at the company's dividend growth, its current annualized dividend of $3.16 is up 7.5% from last year. Over the last 5 years, EastGroup Properties has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.29%. 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 58%, meaning it paid out 58% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EGP expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $5.32 per share, with earnings expected to increase 6.83% 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. It's important to keep in mind that not all companies provide 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. That said, they can take comfort from the fact that EGP is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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EastGroup Properties, Inc. (EGP) : Free Stock Analysis Report
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