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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 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.
Alexandria Real Estate Equities in Focus
Alexandria Real Estate Equities (ARE) is headquartered in Pasadena, and is in the Finance sector. The stock has seen a price change of 7.51% since the start of the year. Currently paying a dividend of $1.12 per share, the company has a dividend yield of 2.34%. In comparison, the REIT and Equity Trust - Other industry's yield is 2.81%, while the S&P 500's yield is 1.35%.
Looking at dividend growth, the company's current annualized dividend of $4.48 is up 5.7% from last year. In the past five-year period, Alexandria Real Estate Equities has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.12%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, Alexandria Real Estate Equities's payout ratio is 59%, which means it paid out 59% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, ARE expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $7.76 per share, representing a year-over-year earnings growth rate of 6.30%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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. That said, they can take comfort from the fact that ARE 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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Alexandria Real Estate Equities, Inc. (ARE) : Free Stock Analysis Report
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