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This is Why Kilroy Realty (KRC) is a Great Dividend Stock

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

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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Kilroy Realty in Focus

Headquartered in Los Angeles, Kilroy Realty (KRC - Free Report) is a Finance stock that has seen a price change of 12.98% so far this year. Currently paying a dividend of $0.52 per share, the company has a dividend yield of 2.77%. In comparison, the REIT and Equity Trust - Other industry's yield is 3.15%, while the S&P 500's yield is 1.44%.

In terms of dividend growth, the company's current annualized dividend of $2.08 is up 2% from last year. Kilroy Realty has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 5.49%. 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. Kilroy Realty's current payout ratio is 53%, meaning it paid out 53% of its trailing 12-month EPS as dividend.

KRC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $4.44 per share, representing a year-over-year earnings growth rate of 14.14%.

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. 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, KRC 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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