Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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.

Kilroy Realty in Focus

Headquartered in Los Angeles, Kilroy Realty (KRC) is a Finance stock that has seen a price change of 14.3% so far this year. Currently paying a dividend of $0.5 per share, the company has a dividend yield of 3.05%. In comparison, the REIT and Equity Trust - Other industry's yield is 2.93%, while the S&P 500's yield is 1.39%.

Taking a look at the company's dividend growth, its current annualized dividend of $2 is up 1.5% from last year. In the past five-year period, Kilroy Realty has increased its dividend 4 times on a year-over-year basis for an average annual increase of 6.48%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Kilroy Realty's current payout ratio is 53%. This means it paid out 53% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for KRC for this fiscal year. The Zacks Consensus Estimate for 2021 is $3.78 per share, representing a year-over-year earnings growth rate of 1.89%.

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. However, not all companies offer 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. That said, they can take comfort from the fact that KRC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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