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.
Rexford Industrial in Focus
Headquartered in Los Angeles, Rexford Industrial (REXR) is a Finance stock that has seen a price change of 22.36% so far this year. The industrial real estate investment trust is currently shelling out a dividend of $0.19 per share, with a dividend yield of 2.05%. This compares to the REIT and Equity Trust - Other industry's yield of 4.22% and the S&P 500's yield of 1.92%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.74 is up 15.6% from last year. Over the last 5 years, Rexford Industrial has increased its dividend 3 times on a year-over-year basis for an average annual increase of 8.15%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Rexford Industrial's current payout ratio is 58%, meaning it paid out 58% of its trailing 12-month EPS as dividend.
REXR is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $1.18 per share, representing a year-over-year earnings growth rate of 5.36%.
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, REXR 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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Rexford Industrial Realty, Inc. (REXR) : Free Stock Analysis Report
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