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.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Essex Property Trust in Focus
Based in San Mateo, Essex Property Trust (ESS) is in the Finance sector, and so far this year, shares have seen a price change of 33.82%. The real estate investment trust is paying out a dividend of $1.95 per share at the moment, with a dividend yield of 2.38% compared to the REIT and Equity Trust - Residential industry's yield of 2.98% and the S&P 500's yield of 1.95%.
In terms of dividend growth, the company's current annualized dividend of $7.80 is up 4.8% from last year. Over the last 5 years, Essex Property Trust has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.89%. 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. Essex Property Trust's current payout ratio is 60%. This means it paid out 60% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, ESS expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $13.33 per share, which represents a year-over-year growth rate of 6.05%.
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.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, ESS 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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Essex Property Trust, Inc. (ESS) : Free Stock Analysis Report
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