Why Rexford Industrial (REXR) is a Top Dividend Stock for Your Portfolio
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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Rexford Industrial in Focus
Headquartered in Los Angeles, Rexford Industrial (REXR) is a Finance stock that has seen a price change of -15.2% so far this year. The industrial real estate investment trust is currently shelling out a dividend of $0.22 per share, with a dividend yield of 2.22%. This compares to the REIT and Equity Trust - Other industry's yield of 5.25% and the S&P 500's yield of 2.19%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.86 is up 16.2% from last year. Over the last 5 years, Rexford Industrial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.18%. 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. Rexford Industrial's current payout ratio is 60%. This means it paid out 60% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for REXR for this fiscal year. The Zacks Consensus Estimate for 2020 is $1.31 per share, representing a year-over-year earnings growth rate of 6.50%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, REXR 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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Rexford Industrial Realty, Inc. (REXR) : Free Stock Analysis Report
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