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Why Highwoods Properties (HIW) 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 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 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.
Highwoods Properties in Focus
Based in Raleigh, Highwoods Properties (HIW - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 6.54%. The real estate investment trust is paying out a dividend of $0.48 per share at the moment, with a dividend yield of 3.68% compared to the REIT and Equity Trust - Other industry's yield of 4.03% and the S&P 500's yield of 1.78%.
In terms of dividend growth, the company's current annualized dividend of $1.92 is up 1.1% from last year. In the past five-year period, Highwoods Properties has increased its dividend 3 times on a year-over-year basis for an average annual increase of 3%. 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. Right now, Highwoods Properties's payout ratio is 56%, which means it paid out 56% of its trailing 12-month EPS as dividend.
HIW is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $3.63 per share, representing a year-over-year earnings growth rate of 9.01%.
Bottom Line
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HIW 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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Why Highwoods Properties (HIW) is a Top Dividend Stock for Your Portfolio
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.
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.
Highwoods Properties in Focus
Based in Raleigh, Highwoods Properties (HIW - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 6.54%. The real estate investment trust is paying out a dividend of $0.48 per share at the moment, with a dividend yield of 3.68% compared to the REIT and Equity Trust - Other industry's yield of 4.03% and the S&P 500's yield of 1.78%.
In terms of dividend growth, the company's current annualized dividend of $1.92 is up 1.1% from last year. In the past five-year period, Highwoods Properties has increased its dividend 3 times on a year-over-year basis for an average annual increase of 3%. 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. Right now, Highwoods Properties's payout ratio is 56%, which means it paid out 56% of its trailing 12-month EPS as dividend.
HIW is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $3.63 per share, representing a year-over-year earnings growth rate of 9.01%.
Bottom Line
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HIW 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).