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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Urban Edge Properties in Focus

Based in New York, Urban Edge Properties (UE) is in the Finance sector, and so far this year, shares have seen a price change of -14.19%. The real estate investment trust that owns and manages shopping centers is paying out a dividend of $0.19 per share at the moment, with a dividend yield of 4.12% compared to the REIT and Equity Trust - Retail industry's yield of 4.17% and the S&P 500's yield of 1.61%.

Looking at dividend growth, the company's current annualized dividend of $0.76 is up 11.8% from last year. Over the last 5 years, Urban Edge Properties has increased its dividend 3 times on a year-over-year basis for an average annual increase of 5.97%. 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, Urban Edge Properties's payout ratio is 51%, which means it paid out 51% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, UE expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $1.40 per share, with earnings expected to increase 3.70% from the year ago period.

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. 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, UE presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).

Story Continues

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This article originally published on Zacks Investment Research (zacks.com).

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