One of the leading healthcare real estate investment trust’s (REIT) – HCP Inc. (HCP - Analyst Report) announced a 3.8% hike in its quarterly cash dividend rate. The company will now pay a dividend of 54.5 cents per share compared with 52.5 cents paid in the prior quarter. The increased dividend will be paid on Feb 25, 2014 to stockholders of record on Feb 10.
Based on this new dividend rate, HCP’s total 2014 dividend will be $2.18 per share. This reflects a 3.8% hike from the 2013 dividend. As a matter of fact, the new dividend rate results in an annualized yield of 5.6% based on HCP’s closing price of $38.89 on Jan 30.
HCP has established an impressive track record of conservative capital management and cash returns to shareholders in the form of steady dividend and has hiked its dividend per share for 29 consecutive years since it became public in 1985.
The company has one of the most diversified, well balanced portfolios in the healthcare sector with exposure to all types of facilities. The diverse product mix of the company facilitates it to explore the opportunities available in various areas, based on individual market dynamics.
Additionally, the healthcare sector is relatively immune to the macroeconomic problems faced by office, retail and apartment companies and offers stability to the company amid the volatility in the market. Furthermore, the introduction of the Affordable Act is likely to brighten growth prospects for the company as it will widen the insured people bracket that will in turn boost the demand for new outpatient facilities.
As a matter of fact, a number of REIT stocks have increased their dividend payouts this week. This includes Apartment Investment & Management Company (AIV - Analyst Report), which hiked its quarterly dividend by around 8.3% sequentially to 26 cents and AvalonBay Communities, Inc. (AVB - Analyst Report) that raised its quarterly dividend by 8.4% sequentially to $1.16. Moreover, another REIT, DuPont Fabros Technology, Inc. (DFT - Snapshot Report) increased its quarterly dividend, this week, by 40% sequentially to 35 cents per share.
Solid dividend payouts are arguably the biggest attraction for REIT investors as the U.S. law requires these companies to distribute 90% of their annual taxable income in the form of dividends to the shareholders.
HCP is scheduled to release its fourth-quarter 2014 results on Feb 11. The company’s Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at 0.00%. This along with the Zacks Rank #3 makes surprise prediction difficult.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.