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This is Why First Industrial Realty Trust (FR) is a Great Dividend Stock

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

First Industrial Realty Trust in Focus

Based in Chicago, First Industrial Realty Trust (FR) is in the Finance sector, and so far this year, shares have seen a price change of 24.76%. Currently paying a dividend of $0.27 per share, the company has a dividend yield of 2.05%. In comparison, the REIT and Equity Trust - Other industry's yield is 2.98%, while the S&P 500's yield is 1.42%.

In terms of dividend growth, the company's current annualized dividend of $1.08 is up 8% from last year. In the past five-year period, First Industrial Realty Trust has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.81%. 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. First Industrial Realty Trust's current payout ratio is 58%. This means it paid out 58% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, FR expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $1.93 per share, representing a year-over-year earnings growth rate of 4.89%.

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. 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, FR 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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