U.S. Markets closed

Why EastGroup Properties (EGP) is a Great Dividend Stock Right Now

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

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.

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.

EastGroup Properties in Focus

Based in Ridgeland, EastGroup Properties (EGP) is in the Finance sector, and so far this year, shares have seen a price change of -7.37%. The real estate investment trust is paying out a dividend of $0.75 per share at the moment, with a dividend yield of 2.44% compared to the REIT and Equity Trust - Other industry's yield of 4.08% and the S&P 500's yield of 1.81%.

In terms of dividend growth, the company's current annualized dividend of $3 is up 2% from last year. In the past five-year period, EastGroup Properties has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6%. 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. EastGroup Properties's current payout ratio is 59%, meaning it paid out 59% of its trailing 12-month EPS as dividend.

EGP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $5.18 per share, which represents a year-over-year growth rate of 4.02%.

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. It's important to keep in mind that not all companies provide 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, EGP 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).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
EastGroup Properties, Inc. (EGP) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research