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.
Cash flow can come from bond interest, interest from other types of investments, and, of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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.
Headquartered in Boston, Stag Industrial (STAG) is a Finance stock that has seen a price change of 3.78% so far this year. The industrial real estate investment trust is currently shelling out a dividend of $0.39 per share, with a dividend yield of 4.06%. This compares to the REIT and Equity Trust - Other industry's yield of 4.49% and the S&P 500's yield of 1.42%.
Looking at dividend growth, the company's current annualized dividend of $1.55 is up 4% from last year. Over the last 5 years, Stag Industrial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 0.70%. 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. Stag's current payout ratio is 60%, meaning it paid out 60% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for STAG for this fiscal year. The Zacks Consensus Estimate for 2026 is $2.63 per share, which represents a year-over-year growth rate of 3.14%.
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.
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, STAG presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Stag Industrial, Inc. (STAG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).