Why Kilroy Realty (KRC) is a Great Dividend Stock Right Now
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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
Based in Los Angeles, Kilroy Realty (KRC) is in the Finance sector, and so far this year, shares have seen a price change of 22.12%. The real estate investment trust is paying out a dividend of $0.49 per share at the moment, with a dividend yield of 2.53% compared to the REIT and Equity Trust - Other industry's yield of 4.18% and the S&P 500's yield of 1.91%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.94 is up 8.4% from last year. Over the last 5 years, Kilroy Realty has increased its dividend 4 times on a year-over-year basis for an average annual increase of 7.81%. 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, Kilroy Realty's payout ratio is 54%, which means it paid out 54% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, KRC expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $3.74 per share, representing a year-over-year earnings growth rate of 7.47%.
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.
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 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 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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