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Arbor Realty (ABR) Hikes Dividend by 2.8%: Worth a Look?
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Arbor Realty Trust, Inc.’s (ABR - Free Report) board of directors recently approved a 2.8% sequential hike in its quarterly cash dividend. The revised quarterly dividend now totals 37 cents per share compared with the previous figure of 36 cents. The amount will be paid out on Mar 18 to its shareholders of record as of Mar 4, 2022.
This marks the seventh consecutive quarterly dividend raise and the 10th consecutive annual dividend hike by this New York-headquartered real estate investment trust, reflecting its commitment to return value to its shareholders with solid cash-generation capabilities. Prior to this hike, ABR had increased its dividend 2.9% (from 35 cents to 36 cents per share) last October.
Considering the last day’s closing price of $17.33 per share, the dividend yield is currently 8.5%. The yield is not only attractive to income investors but also represents a steady income stream.
In the fourth quarter, the firm posted distributable earnings per share of 57 cents, surpassing the Zacks Consensus Estimate of 40 cents. NII of $76.4 million surged 66% year over year.
Arbor Realty also posted record originations of $16.1 billion, up 76% year over year. Distributable earnings of $2.01 per share in 2021 saw a 15% increase from the 2020 figure. However, total other revenues witnessed a year-over-year fall of 12% to $103.5 million due to lower mortgage servicing rights in the quarter.
Let’s check out whether it is worth considering the stock now based on this dividend income. A deeper research into the firm’s financial performance and fundamentals will help understand its risks and rewards.
Arbor Realty’s payout ratio is the lowest in the industry, underpinning the sustainability of its dividend payouts. It has a payout rate of 70.41 compared with 77.56 recorded by the industry it belongs to. This means that ABR is reinvesting more money to boost its business. By investing in business growth, ABR will likely muster higher levels of capital gains for investors in the future.
ABR’s ability to sustain the hiked dividend also depends on its earnings growth. Its past performance depicts a robust earnings picture. Arbor Realty recorded an earnings growth rate of 15% over the five years compared against the 5.5% fall witnessed by the industry it belongs to. If this momentum continues in the upcoming period, such dividend payments are here to stay.
As of Dec 31, 2021, Arbor Realty had cash worth $900 million and a servicing portfolio of $26.96 billion. ABR also has decent funding sources, reflecting its sustainable capital deployment to its shareholders, apart from having the capability of growing organically.
Arbor Realty’s return on equity of 18.4% compared with the industry average of 10.2% highlights its better efforts in managing its shareholders’ capital than its peers.
Arbor Realty’s shares have lost 3.3% over the past six months, narrower than the 11.1% fall registered by the industry.
Over the past few months, several companies have rewarded their shareholders with dividend hikes. Some of these are Midland States Bancorp, Inc. (MSBI - Free Report) , HomeStreet, Inc.’s (HMST - Free Report) and Fidelity National Information Services Inc. (FIS - Free Report) .
MSBI declared a quarterly cash dividend of 29 cents per share, up 3.6% from the prior payout. The dividend was paid out on Feb 18 to all its shareholders of record on Feb 11.
This increase represents the 22nd consecutive annual hike in Midland States’ quarterly cash dividend. Prior to this, MSBI had announced a 4.5% rise to 28 cents per share in November 2021.
HMST declared a quarterly dividend of 35 cent per share, representing a hike of 40% from its prior payout. The dividend will be paid out on Feb 23 to its shareholders of record as of Feb 9.
This marks the third dividend hike by HomeStreet. HMST had earlier raised its dividend 66.7% to 25 cents per share in February 2021.
Consistent with its updated capital-allocation strategy announced in November 2021, Fidelity hiked its quarterly common stock dividend 21% from the prior-quarter payout to 47 cents per share in January 2022. The new dividend will be paid out on Mar 29 to its shareholders of record as of Mar 25, this year.
Since March 2012, Fidelity National has raised its dividend eight times. Its dividend was last hiked in February 2021 by 11% to 39 cents per share.
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Arbor Realty (ABR) Hikes Dividend by 2.8%: Worth a Look?
Arbor Realty Trust, Inc.’s (ABR - Free Report) board of directors recently approved a 2.8% sequential hike in its quarterly cash dividend. The revised quarterly dividend now totals 37 cents per share compared with the previous figure of 36 cents. The amount will be paid out on Mar 18 to its shareholders of record as of Mar 4, 2022.
This marks the seventh consecutive quarterly dividend raise and the 10th consecutive annual dividend hike by this New York-headquartered real estate investment trust, reflecting its commitment to return value to its shareholders with solid cash-generation capabilities. Prior to this hike, ABR had increased its dividend 2.9% (from 35 cents to 36 cents per share) last October.
Considering the last day’s closing price of $17.33 per share, the dividend yield is currently 8.5%. The yield is not only attractive to income investors but also represents a steady income stream.
In the fourth quarter, the firm posted distributable earnings per share of 57 cents, surpassing the Zacks Consensus Estimate of 40 cents. NII of $76.4 million surged 66% year over year.
Arbor Realty also posted record originations of $16.1 billion, up 76% year over year. Distributable earnings of $2.01 per share in 2021 saw a 15% increase from the 2020 figure. However, total other revenues witnessed a year-over-year fall of 12% to $103.5 million due to lower mortgage servicing rights in the quarter.
Let’s check out whether it is worth considering the stock now based on this dividend income. A deeper research into the firm’s financial performance and fundamentals will help understand its risks and rewards.
Arbor Realty’s payout ratio is the lowest in the industry, underpinning the sustainability of its dividend payouts. It has a payout rate of 70.41 compared with 77.56 recorded by the industry it belongs to. This means that ABR is reinvesting more money to boost its business. By investing in business growth, ABR will likely muster higher levels of capital gains for investors in the future.
ABR’s ability to sustain the hiked dividend also depends on its earnings growth. Its past performance depicts a robust earnings picture. Arbor Realty recorded an earnings growth rate of 15% over the five years compared against the 5.5% fall witnessed by the industry it belongs to. If this momentum continues in the upcoming period, such dividend payments are here to stay.
As of Dec 31, 2021, Arbor Realty had cash worth $900 million and a servicing portfolio of $26.96 billion. ABR also has decent funding sources, reflecting its sustainable capital deployment to its shareholders, apart from having the capability of growing organically.
Arbor Realty’s return on equity of 18.4% compared with the industry average of 10.2% highlights its better efforts in managing its shareholders’ capital than its peers.
Arbor Realty’s shares have lost 3.3% over the past six months, narrower than the 11.1% fall registered by the industry.
Image Source: Zacks Investment Research
Currently, ABR carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Companies Undertaking Similar Actions
Over the past few months, several companies have rewarded their shareholders with dividend hikes. Some of these are Midland States Bancorp, Inc. (MSBI - Free Report) , HomeStreet, Inc.’s (HMST - Free Report) and Fidelity National Information Services Inc. (FIS - Free Report) .
MSBI declared a quarterly cash dividend of 29 cents per share, up 3.6% from the prior payout. The dividend was paid out on Feb 18 to all its shareholders of record on Feb 11.
This increase represents the 22nd consecutive annual hike in Midland States’ quarterly cash dividend. Prior to this, MSBI had announced a 4.5% rise to 28 cents per share in November 2021.
HMST declared a quarterly dividend of 35 cent per share, representing a hike of 40% from its prior payout. The dividend will be paid out on Feb 23 to its shareholders of record as of Feb 9.
This marks the third dividend hike by HomeStreet. HMST had earlier raised its dividend 66.7% to 25 cents per share in February 2021.
Consistent with its updated capital-allocation strategy announced in November 2021, Fidelity hiked its quarterly common stock dividend 21% from the prior-quarter payout to 47 cents per share in January 2022. The new dividend will be paid out on Mar 29 to its shareholders of record as of Mar 25, this year.
Since March 2012, Fidelity National has raised its dividend eight times. Its dividend was last hiked in February 2021 by 11% to 39 cents per share.