Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Brandywine Realty Trust in Focus
Brandywine Realty Trust (BDN) is headquartered in Philadelphia, and is in the Finance sector. The stock has seen a price change of 11.5% since the start of the year. The real estate investment trust is currently shelling out a dividend of $0.19 per share, with a dividend yield of 5.3%. This compares to the REIT and Equity Trust - Other industry's yield of 4.31% and the S&P 500's yield of 1.87%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.76 is up 5.6% from last year. Brandywine Realty Trust has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 5.66%. 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. Right now, Brandywine Realty Trust's payout ratio is 54%, which means it paid out 54% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BDN expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $1.43 per share, representing a year-over-year earnings growth rate of 4.38%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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 BDN 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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