Mid-America Apartment Communities (MAA) is a Top Dividend Stock Right Now: Should You Buy?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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.
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 -21.65% so far this year. The real estate investment trust is currently shelling out a dividend of $1.09 per share, with a dividend yield of 2.42%. This compares to the REIT and Equity Trust - Residential industry's yield of 2.82% and the S&P 500's yield of 1.54%.
In terms of dividend growth, the company's current annualized dividend of $4.35 is up 6.1% from last year. Mid-America Apartment Communities has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 4.19%. 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. Mid-America Apartment Communities'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 MAA for this fiscal year. The Zacks Consensus Estimate for 2022 is $8.09 per share, which represents a year-over-year growth rate of 15.41%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, MAA 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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MidAmerica Apartment Communities, Inc. (MAA) : Free Stock Analysis Report
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