All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, 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 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) is headquartered in Los Angeles, and is in the Finance sector. The stock has seen a price change of 2.92% since the start of the year. The real estate investment trust is paying out a dividend of $0.49 per share at the moment, with a dividend yield of 2.25% compared to the REIT and Equity Trust - Other industry's yield of 4.03% and the S&P 500's yield of 1.76%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.94 is up 1.6% from last year. Kilroy Realty has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 8.47%. 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. Kilroy Realty's current payout ratio is 50%. This means it paid out 50% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, KRC expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $4.13 per share, which represents a year-over-year growth rate of 5.63%.
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. It's important to keep in mind that not all companies provide 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, KRC 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).
Kilroy Realty Corporation (KRC): Free Stock Analysis Report
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