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Why First Industrial Realty Trust (FR) is a Top Dividend Stock for Your Portfolio

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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But 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 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.

First Industrial Realty Trust in Focus

Headquartered in Chicago, First Industrial Realty Trust (FR - Free Report) is a Finance stock that has seen a price change of -20.57% so far this year. The real estate investment trust is currently shelling out a dividend of $0.29 per share, with a dividend yield of 2.24%. This compares to the REIT and Equity Trust - Other industry's yield of 4.09% and the S&P 500's yield of 1.65%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.18 is up 9.3% from last year. Over the last 5 years, First Industrial Realty Trust has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.47%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. First Industrial Realty Trust's current payout ratio is 56%. This means it paid out 56% of its trailing 12-month EPS as dividend.

FR is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.20 per share, representing a year-over-year earnings growth rate of 11.68%.

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. But, not every company offers 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, FR 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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