Equinix (EQIX) Could Be a Great Choice
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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.
Based in Redwood City, Equinix (EQIX) is in the Finance sector, and so far this year, shares have seen a price change of 32.3%. Currently paying a dividend of $5.16 per share, the company has a dividend yield of 2.04%. In comparison, the REIT and Equity Trust - Retail industry's yield is 3.74%, while the S&P 500's yield is 1.4%.
Looking at dividend growth, the company's current annualized dividend of $20.64 is up 10% from last year. Over the last 5 years, Equinix has increased its dividend 5 times on a year-over-year basis for an average annual increase of 13.62%. 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%, meaning it paid out 52% of its trailing 12-month EPS as dividend.
EQIX is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $42.93 per share, representing a year-over-year earnings growth rate of 12.00%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. 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).
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Equinix, Inc. (EQIX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Source Zacks-com
