All investors like to get big returns from their portfolio, whether through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary goal.
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 profits paid to shareholders; it is often viewed by its dividend yield, a measure that measures a dividend as a percentage of the current stock price. Numerous academic studies show that dividends are a significant part of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
NexPoint Residential Trust Inc.
Dallas-based NexPoint Residential Trust Inc. (NXRT – Free Report) is in the finance industry, and so far this year stocks have seen a 50.91% price change. The REIT currently pays a dividend of $ 0.34 per share, with a dividend yield of 2.14%. This compares to the return of the REIT and the Equity Trust – Residential Sector of 2.96% and the return of the S&P 500 of 1.4%.
In terms of dividend growth, the company’s current annualized dividend of $ 1.37 is up 7.1% from last year. Over the past five years, NexPoint Residential Trust Inc. has increased its dividend 5 times year over year for an average annual increase of 11.18%. Future dividend growth will depend on earnings growth as well as the payout ratio, which is the proportion of a company’s annual earnings per share that it pays out as dividends. NexPoint Residential Trust Inc.’s current payout ratio is 54%. This means that he paid 54% of his 12-month EPS as a dividend.
Earnings growth looks solid for NXRT for this fiscal year. Zacks’ consensus estimate for 2021 is $ 2.64 per share, with earnings expected to rise 6.88% year-over-year.
Investors love dividends for a variety of reasons, ranging from tax advantages and lower overall portfolio risk to dramatically improving earnings from equity investments. It is important to keep in mind that not all companies provide quarterly payment.
Large, established companies that have safer earnings are often considered the best dividend options, but it is quite rare to see high growth companies or tech start-ups offering a dividend to their shareholders. Income investors should be aware that high yielding stocks tend to struggle during times of rising interest rates. That said, they can be reassured that NXRT is not only an attractive dividend game, but also represents a compelling investment opportunity with a Zacks ranking of # 2 (buy).