Yahoo Finance Why Equinix (EQIX) is a Great Dividend Stock Right Now
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, 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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Equinix in Focus
Equinix (EQIX) is headquartered in Redwood City, and is in the Finance sector. The stock has seen a price change of -5.02% since the start of the year. Currently paying a dividend of $4.26 per share, the company has a dividend yield of 2.23%. In comparison, the REIT and Equity Trust - Retail industry's yield is 4.62%, while the S&P 500's yield is 1.59%.
Taking a look at the company's dividend growth, its current annualized dividend of $17.04 is up 17.6% from last year. In the past five-year period, Equinix has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.67%. 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 53%, meaning it paid out 53% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EQIX expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $34.97 per share, representing a year-over-year earnings growth rate of 8.91%.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, EQIX 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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Equinix, Inc. (EQIX) : Free Stock Analysis Report
