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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Boston Properties in Focus
Based in Boston, Boston Properties (BXP) is in the Finance sector, and so far this year, shares have seen a price change of 17.44%. Currently paying a dividend of $0.95 per share, the company has a dividend yield of 2.87%. In comparison, the REIT and Equity Trust - Other industry's yield is 4.08%, while the S&P 500's yield is 1.87%.
Taking a look at the company's dividend growth, its current annualized dividend of $3.80 is up 8.6% from last year. In the past five-year period, Boston Properties has increased its dividend 2 times on a year-over-year basis for an average annual increase of 10.38%. 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. Right now, Boston Properties's payout ratio is 56%, which means it paid out 56% of its trailing 12-month EPS as dividend.
BXP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $6.95 per share, with earnings expected to increase 10.32% 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. 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, BXP presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Boston Properties, Inc. (BXP) : Free Stock Analysis Report
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