This is Why Rexford Industrial (REXR) is a Great Dividend Stock

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.

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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Rexford Industrial in Focus

Headquartered in Los Angeles, Rexford Industrial (REXR) is a Finance stock that has seen a price change of -10.6% so far this year. Currently paying a dividend of $0.22 per share, the company has a dividend yield of 2.11%. In comparison, the REIT and Equity Trust - Other industry's yield is 4.87%, while the S&P 500's yield is 2.24%.

Looking at dividend growth, the company's current annualized dividend of $0.86 is up 16.2% from last year. Rexford Industrial has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 10.18%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Rexford Industrial's current payout ratio is 60%. This means it paid out 60% of its trailing 12-month EPS as dividend.

REXR is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $1.30 per share, with earnings expected to increase 5.69% from the year ago period.

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. However, not all companies offer 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that REXR is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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