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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Kilroy Realty in Focus
Kilroy Realty (KRC - Free Report) is headquartered in Los Angeles, and is in the Finance sector. The stock has seen a price change of 24.51% since the start of the year. The real estate investment trust is currently shelling out a dividend of $0.49 per share, with a dividend yield of 2.48%. This compares to the REIT and Equity Trust - Other industry's yield of 4.29% and the S&P 500's yield of 1.89%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.94 is up 8.4% from last year. In the past five-year period, Kilroy Realty has increased its dividend 4 times on a year-over-year basis for an average annual increase of 7.81%. Future dividend growth will depend on earnings growth as well as 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 54%. This means it paid out 54% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for KRC for this fiscal year. The Zacks Consensus Estimate for 2019 is $3.73 per share, with earnings expected to increase 7.18% from the year ago period.
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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that KRC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).