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Why NexPoint Residential Trust Inc. (NXRT) is a Top Dividend Stock for Your Portfolio
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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.
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.
NexPoint Residential Trust Inc. In Focus
Based in Dallas, NexPoint Residential Trust Inc. (NXRT - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 57.58%. Currently paying a dividend of $0.34 per share, the company has a dividend yield of 2.05%. In comparison, the REIT and Equity Trust - Residential industry's yield is 2.82%, while the S&P 500's yield is 1.37%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.37 is up 7.1% from last year. NexPoint Residential Trust Inc. has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 11.57%. 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. NexPoint Residential Trust Inc.'s current payout ratio is 54%, meaning it paid out 54% of its trailing 12-month EPS as dividend.
NXRT is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $2.64 per share, which represents a year-over-year growth rate of 6.88%.
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. But, not every company offers 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. That said, they can take comfort from the fact that NXRT is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why NexPoint Residential Trust Inc. (NXRT) 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 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.
NexPoint Residential Trust Inc. In Focus
Based in Dallas, NexPoint Residential Trust Inc. (NXRT - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 57.58%. Currently paying a dividend of $0.34 per share, the company has a dividend yield of 2.05%. In comparison, the REIT and Equity Trust - Residential industry's yield is 2.82%, while the S&P 500's yield is 1.37%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.37 is up 7.1% from last year. NexPoint Residential Trust Inc. has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 11.57%. 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. NexPoint Residential Trust Inc.'s current payout ratio is 54%, meaning it paid out 54% of its trailing 12-month EPS as dividend.
NXRT is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $2.64 per share, which represents a year-over-year growth rate of 6.88%.
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. But, not every company offers 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. That said, they can take comfort from the fact that NXRT is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).