Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.

Kite Realty Group in Focus

Headquartered in Indianapolis, Kite Realty Group (KRG) is a Finance stock that has seen a price change of 12.6% so far this year. The real estate investment trust is currently shelling out a dividend of $0.26 per share, with a dividend yield of 4.04%. This compares to the REIT and Equity Trust - Retail industry's yield of 3.92% and the S&P 500's yield of 1.54%.

Looking at dividend growth, the company's current annualized dividend of $1.04 is up 8.3% from last year. In the past five-year period, Kite Realty Group has increased its dividend 4 times on a year-over-year basis for an average annual increase of 8.77%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, Kite Realty Group's payout ratio is 49%, which means it paid out 49% of its trailing 12-month EPS as dividend.

KRG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $2.06 per share, with earnings expected to increase 1.48% from the year ago period.

Bottom Line

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that KRG is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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