Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Douglas Emmett in Focus
Douglas Emmett (DEI) is headquartered in Santa Monica, and is in the Finance sector. The stock has seen a price change of -31.3% since the start of the year. The real estate investment trust is paying out a dividend of $0.28 per share at the moment, with a dividend yield of 3.71% compared to the REIT and Equity Trust - Other industry's yield of 4.87% and the S&P 500's yield of 2.26%.
Looking at dividend growth, the company's current annualized dividend of $1.12 is up 5.7% from last year. In the past five-year period, Douglas Emmett has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.11%. 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, Douglas Emmett's payout ratio is 53%, which means it paid out 53% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, DEI expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $2.22 per share, representing a year-over-year earnings growth rate of 5.71%.
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.
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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, DEI 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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Douglas Emmett, Inc. (DEI) : Free Stock Analysis Report
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