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.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Regency Centers in Focus
Regency Centers (REG - Free Report) is headquartered in Jacksonville, and is in the Finance sector. The stock has seen a price change of 8.79% since the start of the year. Currently paying a dividend of $0.58 per share, the company has a dividend yield of 3.67%. In comparison, the REIT and Equity Trust - Retail industry's yield is 5.27%, while the S&P 500's yield is 1.99%.
Looking at dividend growth, the company's current annualized dividend of $2.34 is up 5.4% from last year. In the past five-year period, Regency Centers has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.69%. 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. Regency Centers's current payout ratio is 60%. This means it paid out 60% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for REG for this fiscal year. The Zacks Consensus Estimate for 2019 is $3.85 per share, with earnings expected to increase 0.52% from the year ago period.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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, REG 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).