Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Ventas in Focus
Ventas (VTR) is headquartered in Chicago, and is in the Finance sector. The stock has seen a price change of 7.23% since the start of the year. Currently paying a dividend of $0.48 per share, the company has a dividend yield of 3.04%. In comparison, the REIT and Equity Trust - Other industry's yield is 4.96%, while the S&P 500's yield is 1.57%.
Looking at dividend growth, the company's current annualized dividend of $1.92 is up 6.7% from last year. Ventas has increased its dividend 1 times on a year-over-year basis over the last 5 years for an average annual increase of 0.37%. 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, Ventas's payout ratio is 59%, which means it paid out 59% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for VTR for this fiscal year. The Zacks Consensus Estimate for 2025 is $3.44 per share, representing a year-over-year earnings growth rate of 7.84%.
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. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, VTR 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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Ventas, Inc. (VTR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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