Why Kilroy Realty (KRC) is a Top Dividend Stock for Your Portfolio

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.

Kilroy Realty in Focus

Based in Los Angeles, Kilroy Realty (KRC) is in the Finance sector, and so far this year, shares have seen a price change of -27.91%. The real estate investment trust is currently shelling out a dividend of $0.52 per share, with a dividend yield of 4.34%. This compares to the REIT and Equity Trust - Other industry's yield of 3.9% and the S&P 500's yield of 1.68%.

In terms of dividend growth, the company's current annualized dividend of $2.08 is up 2% from last year. Kilroy Realty has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 4.53%. 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. Kilroy Realty's current payout ratio is 48%, meaning it paid out 48% of its trailing 12-month EPS as dividend.

KRC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $4.59 per share, which represents a year-over-year growth rate of 17.99%.

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.

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