All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Essex Property Trust in Focus
Essex Property Trust (ESS) is headquartered in San Mateo, and is in the Finance sector. The stock has seen a price change of 35.11% since the start of the year. Currently paying a dividend of $1.95 per share, the company has a dividend yield of 2.35%. In comparison, the REIT and Equity Trust - Residential industry's yield is 2.91%, while the S&P 500's yield is 1.9%.
Looking at dividend growth, the company's current annualized dividend of $7.80 is up 4.8% from last year. In the past five-year period, Essex Property Trust has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.35%. 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. Essex Property Trust's current payout ratio is 60%, meaning 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, representing a year-over-year earnings growth rate of 6.05%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. 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, ESS 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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Essex Property Trust, Inc. (ESS) : Free Stock Analysis Report
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