Equinix (EQIX) Could Be a Great Choice

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

Equinix in Focus

Based in Redwood City, Equinix (EQIX) is in the Finance sector, and so far this year, shares have seen a price change of -8.1%. Currently paying a dividend of $4.69 per share, the company has a dividend yield of 2.16%. In comparison, the REIT and Equity Trust - Retail industry's yield is 4.2%, while the S&P 500's yield is 1.57%.

Taking a look at the company's dividend growth, its current annualized dividend of $18.76 is up 10.1% from last year. Equinix has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 13.07%. 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. Equinix's current payout ratio is 52%. This means it paid out 52% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, EQIX expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $37.60 per share, which represents a year-over-year growth rate of 7.37%.

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. But, not every company offers 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that EQIX 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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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Source Zacks-com