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NexPoint Residential Trust Inc. (NXRT) is a Top Dividend Stock Right Now: Should You Buy?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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 -37.65%. The real estate investment trust is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 2.91% compared to the REIT and Equity Trust - Residential industry's yield of 2.88% and the S&P 500's yield of 1.68%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.52 is up 8.3% from last year. In the past five-year period, NexPoint Residential Trust Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.34%. 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 46%. This means it paid out 46% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for NXRT for this fiscal year. The Zacks Consensus Estimate for 2022 is $3.40 per share, representing a year-over-year earnings growth rate of 23.64%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, NXRT 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).