Most everyone loves an early holiday present. And for some real estate investment trust (REIT) investors, that early gift came in the form of a dividend increase over the past two weeks.
Of course, a dividend increase is great because it puts more income into the pockets of investors and increases the yield on their purchase price, but more importantly, a dividend increase also signals to the markets that the company expects to perform well, perhaps generating increases in revenue and funds from operations (FFO) in the near future.
Dividend increases also may have a beneficial effect on a REIT’s share price, especially if the increases are large or frequently occurring.
Take a look at three diverse types of REITs that have rewarded shareholders by announcing dividend increases in the past two weeks:
Realty Income Corp. O is a San Diego-based REIT that owns and operates retail properties under long-term net lease contracts. Realty Income’s tenants are large, well-known companies like Walgreens Co., 7-Eleven Inc., CVS Pharmacy Inc., Lowe’s Cos. Inc., Dollar General Corp., FedEx Corp. and Walmart Inc. In total, it owns and operates over 11,700 properties across the U.S., the U.K and Spain.
The “monthly dividend company,” as it calls itself, is a member of the S&P 500 Dividend Aristocrats index that has declared 630 consecutive monthly stock dividends over 53 years and has increased its dividend 118 times since its initial public offering (IPO) in 1994. That’s a track record very few REITs come close to.
On Dec. 13, Realty Income announced an increase to its monthly dividend from $0.248 to $0.2485. The ex-dividend date is Dec. 30, and the dividend will be paid on Jan. 1. The 52-week range is $55.50 to $75.40.
While this latest hike may not seem like much, it should be noted that Realty Income has raised its dividend in small increments like this 14 times over the last five years, increasing the total dividend by 20.4%. The present dividend yield is 4.5%.
Mid-America Apartment Communities Inc. MAA is a Germantown, Tennessee-based residential REIT that specializes in purchasing and leasing apartment complexes. It owns over 101,000 units in 296 communities in 16 states and Washington, D.C. Most of Mid-America Apartment Communities’ properties are located in the Southeast, Southwest and Mid-Atlantic states. The 52-week range is $141.13 to $231.63, and the most recent closing share price was $155.31.
On Dec. 13, Mid-America Apartment Communities raised its quarterly dividend by 12%, from $1.25 to $1.40 per share. The ex-dividend date is Jan. 12, and the dividend will be paid on Jan. 31. The present yield is 3.6%.
Mid-America Apartment Communities has raised its dividend five times since 2017, for a total increase of 35.4%. That’s the gift that keeps on giving!
Braemar Hotels & Resorts BHR is a Dallas-based REIT that invests in luxury hotels and resorts from California to Pennsylvania, and in Puerto Rico. Braemar Hotels & Resorts direct hotel investments include 16 properties with a total of 4,181 rooms. The 52-week range is $3.41 to $6.64.
On Dec. 8, Braemar Hotels & Resorts announced a huge 400% quarterly dividend increase from $0.01 to $0.05. However, it should be noted that three years ago Braemar Hotels & Resorts paid a quarterly dividend of $0.16 but then eliminated the dividend until March 2022, when it was reinstated at a penny per share.
With this latest increase, the yield is now 5%. It also suggests that Braemar Hotels & Resorts may be seeing improvements in its business after the COVID-19 pandemic decimated its revenue and earnings between 2020 and 2021.
Weekly REIT Report: REITs are one of the most misunderstood investment options, making it difficult for investors to spot incredible opportunities until it’s too late. Benzinga’s in-house real estate research team has been working hard to identify the greatest opportunities in today’s market, which you can gain access to for free by signing up for Benzinga’s Weekly REIT Report.
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