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.
Essex Property Trust in Focus
Essex Property Trust (ESS) is headquartered in San Mateo, and is in the Finance sector. The stock has seen a price change of -19.47% since the start of the year. The real estate investment trust is currently shelling out a dividend of $2.08 per share, with a dividend yield of 3.43%. This compares to the REIT and Equity Trust - Residential industry's yield of 4.5% and the S&P 500's yield of 2.19%.
In terms of dividend growth, the company's current annualized dividend of $8.31 is up 6.5% from last year. In the past five-year period, Essex Property Trust has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.59%. 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. Right now, Essex Property Trust's payout ratio is 58%, which means it paid out 58% of its trailing 12-month EPS as dividend.
ESS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $13.62 per share, representing a year-over-year earnings growth rate of 1.79%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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, ESS 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).
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Essex Property Trust, Inc. (ESS) : Free Stock Analysis Report
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