2023-03-15 10:20:00 ET
A high-yielding dividend stock can be both alluring and scary at the same time. While it can be alluring in the sense that you can earn a high yield, it can also be all for naught if the company can't afford to make dividend payments in the future because its payout is unsustainably high. But investors should remember that a yield is just a function of the dividend paid and the current stock price -- it tells you nothing about whether or not a company can afford it.
At 6.5%, Healthcare Realty Trust (NYSE: HR) pays a dividend yield that is more than three times the S&P 500 average of 1.7%. It might appear that the dividend is too high, but is that really the case, or is this just an underrated dividend stock that's worth adding to your portfolio?
A payout ratio is much more important for investors than just the yield because it can put the total payout a company makes annually within the context of how much profit it is generating in the same period.
For further details see:
Should You Buy Healthcare Realty Trust for Its 6.5% Yield?