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 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.
Highwoods Properties in Focus
Highwoods Properties (HIW) is headquartered in Raleigh, and is in the Finance sector. The stock has seen a price change of -25.19% since the start of the year. Currently paying a dividend of $0.48 per share, the company has a dividend yield of 5.25%. In comparison, the REIT and Equity Trust - Other industry's yield is 4.35%, while the S&P 500's yield is 1.86%.
Looking at 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 4 times on a year-over-year basis for an average annual increase of 3.21%. 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. Highwoods Properties's current payout ratio is 53%. This means it paid out 53% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HIW for this fiscal year. The Zacks Consensus Estimate for 2020 is $3.58 per share, which represents a year-over-year growth rate of 7.51%.
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.
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. That said, they can take comfort from the fact that HIW is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Highwoods Properties, Inc. (HIW): Free Stock Analysis Report
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