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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 the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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
EastGroup Properties (EGP) is headquartered in Ridgeland, and is in the Finance sector. The stock has seen a price change of 12.13% since the start of the year. The real estate investment trust is currently shelling out a dividend of $0.79 per share, with a dividend yield of 2.04%. This compares to the REIT and Equity Trust - Other industry's yield of 3.03% and the S&P 500's yield of 1.27%.
In terms of dividend growth, the company's current annualized dividend of $3.16 is up 2.6% from last year. EastGroup Properties has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 6.53%. 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. EastGroup Properties's current payout ratio is 57%, meaning it paid out 57% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for EGP for this fiscal year. The Zacks Consensus Estimate for 2021 is $5.72 per share, representing a year-over-year earnings growth rate of 6.32%.
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.
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. 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).
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EastGroup Properties, Inc. (EGP) : Free Stock Analysis Report
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