Why Ventas (VTR) is a Great Dividend Stock Right Now

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Ventas (VTR) is headquartered in Chicago, and is in the Finance sector. The stock has seen a price change of 5.98% since the start of the year. The seniors housing real estate investment trust is paying out a dividend of $0.48 per share at the moment, with a dividend yield of 2.54% compared to the REIT and Equity Trust - Other industry's yield of 5.02% and the S&P 500's yield of 1.47%.

Looking at dividend growth, the company's current annualized dividend of $2.08 is up 8.3% from last year. Over the last 5 years, Ventas has increased its dividend 1 times on a year-over-year basis for an average annual increase of 0.70%. 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. Ventas's current payout ratio is 55%, meaning it paid out 55% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for VTR for this fiscal year. The Zacks Consensus Estimate for 2026 is $3.84 per share, which represents a year-over-year growth rate of 10.34%.

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.

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. That said, they can take comfort from the fact that VTR is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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Ventas, Inc. (VTR): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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