Alexandria Real Estate Equities Inc. (ARE - Snapshot Report) – a real estate investment trust (REIT) – recently announced an 8% hike in its quarterly cash dividend rate. The company will now pay a dividend of 65 cents per share for second-quarter 2013, up 5 cents from the prior-quarter dividend. The increased dividend will be paid on Jul 15, 2013 to stockholders of record on Jun 28.
With low funds from operations (FFO) payout ratio of 55% as of Mar 31, 2013, the company has adequate room to enhance its dividend rate going forward. Most recently, the company hiked its dividend by 7% to 60 cents in the prior quarter.
Therefore, the current dividend hike move justifies the company’s effort to boost its shareholders’ wealth. Hence, we remain encouraged. Notably, with the latest dividend hike, the company has achieved a 14 cents or 27% year-over-year increase.
As of Mar 31, 2013, Alexandria Real Estate had cash and cash equivalents worth $87.0 million, up from $77.4 million as of Mar 31, 2012. We believe that the company has adequate cash to provide optimum shareholder value.
As a matter of fact, 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 shareholders.
Pasadena, CA-based Alexandria Real Estate is a major owner and leading life science real estate company, focused chiefly on science-driven cluster development through the ownership, operation, management, and selective acquisition, development, and redevelopment of properties containing life science laboratory space.
Alexandria currently has a Zacks Rank #3 (Hold). However, a number of REITs that are performing well and deserve a look include CommonWealth REIT and Sunstone Hotel Investors Inc. (SHO - Snapshot Report) , both carrying a Zacks Rank #1 (Strong Buy) as well as CubeSmart (CUBE - Snapshot Report) that has a Zacks Rank #2 (Buy).