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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.
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.
Highwoods Properties in Focus
Headquartered in Raleigh, Highwoods Properties (HIW) is a Finance stock that has seen a price change of 15.44% so far this year. Currently paying a dividend of $0.5 per share, the company has a dividend yield of 4.37%. In comparison, the REIT and Equity Trust - Other industry's yield is 2.98%, while the S&P 500's yield is 1.37%.
Looking at dividend growth, the company's current annualized dividend of $2 is up 4.2% from last year. Over the last 5 years, Highwoods Properties has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.67%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Highwoods Properties's payout ratio is 54%, which means it paid out 54% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, HIW expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $3.71 per share, with earnings expected to increase 3.63% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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. 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, HIW 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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Highwoods Properties, Inc. (HIW) : Free Stock Analysis Report
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