Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Urban Edge Properties in Focus
Headquartered in New York, Urban Edge Properties (UE) is a Finance stock that has seen a price change of -14.61% so far this year. The real estate investment trust that owns and manages shopping centers is paying out a dividend of $0.19 per share at the moment, with a dividend yield of 4.14% compared to the REIT and Equity Trust - Retail industry's yield of 4.41% and the S&P 500's yield of 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 3 times on a year-over-year basis for an average annual increase of 11.83%. 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. Urban Edge Properties's current payout ratio is 56%, meaning it paid out 56% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for UE for this fiscal year. The Zacks Consensus Estimate for 2025 is $1.38 per share, which represents a year-over-year growth rate of 2.22%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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 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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