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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. 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.

Kilroy Realty in Focus

Kilroy Realty (KRC - Free Report) is headquartered in Los Angeles, and is in the Finance sector. The stock has seen a price change of 3.69% since the start of the year. The real estate investment trust is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 3.36% compared to the REIT and Equity Trust - Other industry's yield of 3.5% and the S&P 500's yield of 1.41%.

In terms of dividend growth, the company's current annualized dividend of $2 is up 1.5% from last year. In the past five-year period, Kilroy Realty has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.60%. 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. Right now, Kilroy Realty's payout ratio is 54%, which means it paid out 54% of its trailing 12-month EPS as dividend.

KRC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $4.13 per share, with earnings expected to increase 11.32% from the year ago period.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. 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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