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Why Kilroy Realty (KRC) 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.

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.

Kilroy Realty in Focus

Based in Los Angeles, Kilroy Realty (KRC - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -8.74%. The real estate investment trust is currently shelling out a dividend of $0.52 per share, with a dividend yield of 3.43%. This compares to the REIT and Equity Trust - Other industry's yield of 3.72% and the S&P 500's yield of 1.56%.

Taking a look at the company's dividend growth, its 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 4.70%. 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 51%. This means it paid out 51% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for KRC for this fiscal year. The Zacks Consensus Estimate for 2022 is $4.48 per share, which represents a year-over-year growth rate of 15.17%.

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.

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, 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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