Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Urban Edge Properties in Focus
Urban Edge Properties (UE) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of -11.58% since the start of the year. Currently paying a dividend of $0.19 per share, the company has a dividend yield of 4%. In comparison, the REIT and Equity Trust - Retail industry's yield is 4.07%, while the S&P 500's yield is 1.59%.
In terms of dividend growth, the company's current annualized dividend of $0.76 is up 11.8% from last year. In the past five-year period, Urban Edge Properties has increased its dividend 2 times on a year-over-year basis for an average annual increase of 5.97%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Urban Edge Properties's payout ratio is 51%, which means it paid out 51% of its trailing 12-month EPS as dividend.
UE is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $1.40 per share, with earnings expected to increase 3.70% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, UE is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Urban Edge Properties (UE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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