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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Based in Greensboro, Tanger (SKT) is in the Finance sector, and so far this year, shares have seen a price change of 4.91%. Currently paying a dividend of $0.31 per share, the company has a dividend yield of 3.57%. In comparison, the REIT and Equity Trust - Retail industry's yield is 4.29%, while the S&P 500's yield is 1.43%.
Looking at dividend growth, the company's current annualized dividend of $1.25 is up 8.4% from last year. Over the last 5 years, Tanger has increased its dividend 4 times on a year-over-year basis for an average annual increase of 14.37%. 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. Tanger's current payout ratio is 51%, meaning it paid out 51% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, SKT expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $2.49 per share, which represents a year-over-year growth rate of 6.87%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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 SKT 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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Tanger Inc. (SKT): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).