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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Kilroy Realty in Focus
Based in Los Angeles, Kilroy Realty (KRC) is in the Finance sector, and so far this year, shares have seen a price change of 13.26%. The real estate investment trust is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 3.08% compared to the REIT and Equity Trust - Other industry's yield of 3.37% and the S&P 500's yield of 1.4%.
In terms of dividend growth, the company's current annualized dividend of $2 is up 1.5% from last year. Kilroy Realty has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 7.60%. 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. Kilroy Realty's current payout ratio is 54%, meaning it paid out 54% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for KRC for this fiscal year. The Zacks Consensus Estimate for 2021 is $4.08 per share, with earnings expected to increase 9.97% 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, KRC 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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Kilroy Realty Corporation (KRC) : Free Stock Analysis Report
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