Getting great returns from their portfolios is the aim of the almost all investors unconcerned by the type of securities they may have to use. But the scenario is different in the case of income investors where the primary focus is acquiring cash flow from the liquid investments. The cash flow can be generated from either bond interest, interests generated from other types of investments and dividends.
What is a dividend?
It is a desired distribution of the company’s earning that is distributed among the stakeholders, and the investors perceive by its dividend yield, which measures the dividend as a percentage of the current stock. A vast study has been conducted on the dividends and according to studies, the dividends make substantial percentage of long term returns and its contribution more than one-third of the total returns.
What is the role of American Assets Trust (AAT)?
It is a San Diego based finance sector which has undergone a price change of 0.35% in shares. The trust is already paying a dividend of $0.3 per share, with dividend yield of 2.61%. While looking at dividend growth, the current dividend of the company is 5.3% more than the previous years. The total annual increase of the trust is 4.63%, which is five times more than the other years. The future growth will greatly depend upon the payout ratio and the growth of earnings. At present, the payout ratio of American Asset Trust is 53% of its EPS as dividend. The earnings growth of AAT in the present fiscal year has huge potential which according to Zacks Consensus Estimate in 2020 is $2.41%.
Why investors are interested in the dividends?
It attracts the attention of investors for many reasons. It decreases the portfolio risks, carries tax advantages and increases the profits of stock investment among the many others. In the case of big startups, the do not usually pay dividends to their shareholders but in the established firms this is a common procedure. AAT is a great opportunity for the investors as it helps them struggle during the periods of increased interests.