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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. 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 -5.59% so far this year. The real estate investment trust is paying out a dividend of $0.25 per share at the moment, with a dividend yield of 2.55% compared to the REIT and Equity Trust - Other industry's yield of 3.84% and the S&P 500's yield of 1.72%.
Looking at dividend growth, the company's current annualized dividend of $1 is up 8.7% from last year. Over the last 5 years, First Industrial Realty Trust has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.76%. 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. Right now, First Industrial Realty Trust's payout ratio is 56%, which means it paid out 56% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, FR expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $1.80 per share, which represents a year-over-year growth rate of 3.45%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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, 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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First Industrial Realty Trust, Inc. (FR) : Free Stock Analysis Report
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