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Highwoods Properties (HIW) is a Top Dividend Stock Right Now: Should You Buy?

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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.

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.

Highwoods Properties in Focus

Highwoods Properties (HIW - Free Report) is headquartered in Raleigh, and is in the Finance sector. The stock has seen a price change of -27.56% since the start of the year. The real estate investment trust is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 6.19% compared to the REIT and Equity Trust - Other industry's yield of 3.71% and the S&P 500's yield of 1.61%.

In terms of dividend growth, the company's current annualized dividend of $2 is up 2% from last year. In the past five-year period, Highwoods Properties has increased its dividend 4 times on a year-over-year basis for an average annual increase of 2.34%. 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. Highwoods Properties's current payout ratio is 51%. This means it paid out 51% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for HIW for this fiscal year. The Zacks Consensus Estimate for 2022 is $3.96 per share, which represents a year-over-year growth rate of 5.04%.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HIW 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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