All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Tanger (SKT) is headquartered in Greensboro, and is in the Finance sector. The stock has seen a price change of 6.56% since the start of the year. Currently paying a dividend of $0.29 per share, the company has a dividend yield of 3.29%. In comparison, the REIT and Equity Trust - Retail industry's yield is 3.98%, while the S&P 500's yield is 1.37%.
Looking at dividend growth, the company's current annualized dividend of $1.17 is up 1.5% from last year. Over the last 5 years, Tanger has increased its dividend 4 times on a year-over-year basis for an average annual increase of 14.37%. 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. Tanger's current payout ratio is 52%, meaning it paid out 52% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, SKT expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $2.43 per share, with earnings expected to increase 4.29% from the year ago period.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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. That said, they can take comfort from the fact that SKT is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Tanger Inc. (SKT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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