Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
First Industrial Realty Trust in Focus
Based in Chicago, First Industrial Realty Trust (FR) is in the Finance sector, and so far this year, shares have seen a price change of 38.05%. The real estate investment trust is paying out a dividend of $0.23 per share at the moment, with a dividend yield of 2.31% compared to the REIT and Equity Trust - Other industry's yield of 4.12% and the S&P 500's yield of 1.9%.
Looking at dividend growth, the company's current annualized dividend of $0.92 is up 5.7% from last year. First Industrial Realty Trust has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 16.23%. 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. First Industrial Realty Trust's current payout ratio is 55%. This means it paid out 55% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, FR expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $1.71 per share, with earnings expected to increase 6.88% from the year ago period.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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, FR 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).
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
First Industrial Realty Trust, Inc. (FR) : Free Stock Analysis Report
To read this article on Zacks.com click here.