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Why First Industrial Realty Trust (FR) is a Great Dividend Stock Right Now

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·3 min read
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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.

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 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

Headquartered in Chicago, First Industrial Realty Trust (FR) is a Finance stock that has seen a price change of 14.69% so far this year. Currently paying a dividend of $0.27 per share, the company has a dividend yield of 2.24%. In comparison, the REIT and Equity Trust - Other industry's yield is 3.03%, while the S&P 500's yield is 1.27%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.08 is up 8% from last year. In the past five-year period, First Industrial Realty Trust has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.69%. 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 58%. This means it paid out 58% of its trailing 12-month EPS as dividend.

FR is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $1.91 per share, representing a year-over-year earnings growth rate of 3.80%.

Bottom Line

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, FR 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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