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Why Kilroy Realty (KRC) is a Great Dividend Stock Right Now

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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. But 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

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 8.14%. The real estate investment trust is paying out a dividend of $0.52 per share at the moment, with a dividend yield of 2.89% compared to the REIT and Equity Trust - Other industry's yield of 3.19% and the S&P 500's yield of 1.43%.

Taking a look at the company's dividend growth, its current annualized dividend of $2.08 is up 2% 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 5.49%. 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 53%, meaning it paid out 53% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for KRC for this fiscal year. The Zacks Consensus Estimate for 2022 is $4.44 per share, with earnings expected to increase 14.14% from the year ago period.

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.

Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that KRC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).


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