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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

First Industrial Realty Trust in Focus

Headquartered in Chicago, First Industrial Realty Trust (FR) is a Finance stock that has seen a price change of -7.58% so far this year. The real estate investment trust is currently shelling out a dividend of $0.44 per share, with a dividend yield of 3.84%. This compares to the REIT and Equity Trust - Other industry's yield of 5.33% and the S&P 500's yield of 1.65%.

Looking at dividend growth, the company's current annualized dividend of $1.78 is up 20.3% from last year. Over the last 5 years, First Industrial Realty Trust has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.91%. 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. Right now, First Industrial Realty Trust's payout ratio is 56%, which means it paid out 56% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, FR expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $2.92 per share, representing a year-over-year earnings growth rate of 10.19%.

Bottom Line

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. 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 FR is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).

Story Continues

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

First Industrial Realty Trust, Inc. (FR):Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

View Comments