All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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.
Mid-America Apartment Communities in Focus
Headquartered in Germantown, Mid-America Apartment Communities (MAA) is a Finance stock that has seen a price change of -25.48% so far this year. The real estate investment trust is currently shelling out a dividend of $1.25 per share, with a dividend yield of 2.92%. This compares to the REIT and Equity Trust - Residential industry's yield of 3.01% and the S&P 500's yield of 1.71%.
Taking a look at the company's dividend growth, its current annualized dividend of $5 is up 22% from last year. Over the last 5 years, Mid-America Apartment Communities has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.22%. 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. Mid-America Apartment Communities's current payout ratio is 59%, meaning it paid out 59% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for MAA for this fiscal year. The Zacks Consensus Estimate for 2022 is $8.22 per share, which represents a year-over-year growth rate of 17.26%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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 must be conscious 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 MAA is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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MidAmerica Apartment Communities, Inc. (MAA) : Free Stock Analysis Report
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