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EastGroup Properties (EGP) is a Top Dividend Stock Right Now: Should You Buy?

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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. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

Cash flow can come from bond interest, interest from other types of investments, and of course, 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.

EastGroup Properties in Focus

Headquartered in Ridgeland, EastGroup Properties (EGP - Free Report) is a Finance stock that has seen a price change of 13.18% so far this year. The real estate investment trust is currently shelling out a dividend of $0.79 per share, with a dividend yield of 2.02%. This compares to the REIT and Equity Trust - Other industry's yield of 3.12% and the S&P 500's yield of 1.29%.

Taking a look at the company's dividend growth, its current annualized dividend of $3.16 is up 2.6% from last year. In the past five-year period, EastGroup Properties has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.53%. 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. EastGroup Properties's current payout ratio is 57%. This means it paid out 57% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, EGP expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $5.79 per share, representing a year-over-year earnings growth rate of 7.62%.

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. It's important to keep in mind that not all companies provide a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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, EGP 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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