Tanger (SKT) 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.

Tanger in Focus

Tanger (SKT) is headquartered in Greensboro, and is in the Finance sector. The stock has seen a price change of -12.69% since the start of the year. Currently paying a dividend of $0.29 per share, the company has a dividend yield of 3.93%. In comparison, the REIT and Equity Trust - Retail industry's yield is 4.52%, while the S&P 500's yield is 1.57%.

Looking at dividend growth, the company's current annualized dividend of $1.17 is up 7.8% from last year. In the past five-year period, Tanger has increased its dividend 4 times on a year-over-year basis for an average annual increase of 7.18%. 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, Tanger's payout ratio is 51%, which means it paid out 51% of its trailing 12-month EPS as dividend.

SKT is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $2.24 per share, representing a year-over-year earnings growth rate of 5.16%.

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. It's important to keep in mind that not all companies provide 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. 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, SKT 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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This article originally published on Zacks Investment Research (zacks.com).

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Source Zacks-com