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5 Reasons That Make UDR Stock a Solid Portfolio Choice Now
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UDR, Inc. (UDR - Free Report) , one of the most favorably-positioned multi-family apartment real estate investment trusts (REITs) in the United States, is set to benefit from its geographically-diverse portfolio with a superior product mix of A/B quality properties in urban and suburban markets. Also, technological advancements and process enhancements, and solid balance-sheet strength bode well for the company.
Analysts seem bullish on this Zacks Rank #2 (Buy) stock. The estimate revision trend for 2022 funds from operations (FFO) per share indicates a favorable outlook for the company as it has increased nearly 1% upward over the past two months to $2.32.
Shares of UDR have lost 10.0% in the past six months compared with the industry's decline of 7.7%. However, given its robust fundamentals and positive estimate revisions, the stock is likely to keep performing well in the quarters ahead and hence the dip offers a good entry point.
Image Source: Zacks Investment Research
What Makes UDR a Solid Pick?
Solid Industry Fundamentals: The company’s properties are located throughout the United States, which includes a mix of urban and suburban communities in both coastal and Sunbelt locations. In addition, UDR has a geographically-diverse portfolio with a superior product mix of A/B quality properties in urban and suburban markets.
Therefore, portfolio diversification with respect to geographies and price points limits UDR’s exposure to volatility and concentration risks alongside assuring stable cash flows.
Moreover, a favorable demographic trend in the young-adult age cohort, which has a higher propensity to rent, is likely to fuel the demand for UDR’s properties.
Technological Advancements & Process Enhancements: UDR’s technological investments and process enhancements are expected to help control future expenses and aid margin expansion and long-term profitability. The company’s Next Generation Operating Platform supports electronical interaction, provides service to residents and aids its business prospects. These efforts are likely to give the company a competitive edge over its peers.
FFO Growth: This residential REIT raised its FFO as adjusted per share guidance for 2022. It expects the same to lie in the range of $2.29-$2.33 compared with $2.25-$2.31 guided earlier.
The Zacks Consensus Estimate for the 2022 FFO per share implies a rise of 15.42% for 2022 compared with the industry’s average of 12.60% and is currently pegged at $2.32.
Balance Sheet Strength: UDR has a healthy balance-sheet position with ample liquidity. It exited second-quarter 2022 with $1.3 billion of liquidity and net debt-to-EBITDAre of 6.2X.
With a well-laddered debt maturity schedule and investment grade credit ratings of Baa1/Stable from Moody’s and a BBB+/Stable from S&P Global Ratings, UDR has enough financial flexibility to capitalize on growth opportunities.
Dividend: Solid dividend payouts are the biggest enticement for REIT investors, and UDR remains committed to that. In March 2022, the residential REIT hiked its annualized dividend by 4.7% to $1.52 per share, resulting in a quarterly dividend of 38 cents. It has maintained this payment thereafter.
UDR has increased its dividend five times in the last five years, and the five-year annualized dividend growth rate is 4.57%. Given its robust balance sheet position and a sustainable cash flow from operations, the dividend payment is likely to be sustainable in forthcoming quarters.
Other Stocks to Consider
Some top-ranked stocks from the residential REIT sector are AvalonBay Communities (AVB - Free Report) , Equity Residential (EQR - Free Report) and BRT Apartments (BRT - Free Report) .
The Zacks Consensus Estimate for AvalonBay Communities’ current-year FFO per share has moved marginally northward in the past month to $9.84. AVB currently holds a Zacks Rank #2.
The Zacks Consensus Estimate for Equity Residential’s 2022 FFO per share has moved marginally northward in the past week to $3.52. EQR presently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for BRT Apartments’ ongoing year’s FFO per share has been raised 5.8% over the past two months to $1.63. BRT sports a Zacks Rank #1 (Strong Buy) presently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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5 Reasons That Make UDR Stock a Solid Portfolio Choice Now
UDR, Inc. (UDR - Free Report) , one of the most favorably-positioned multi-family apartment real estate investment trusts (REITs) in the United States, is set to benefit from its geographically-diverse portfolio with a superior product mix of A/B quality properties in urban and suburban markets. Also, technological advancements and process enhancements, and solid balance-sheet strength bode well for the company.
Analysts seem bullish on this Zacks Rank #2 (Buy) stock. The estimate revision trend for 2022 funds from operations (FFO) per share indicates a favorable outlook for the company as it has increased nearly 1% upward over the past two months to $2.32.
Shares of UDR have lost 10.0% in the past six months compared with the industry's decline of 7.7%. However, given its robust fundamentals and positive estimate revisions, the stock is likely to keep performing well in the quarters ahead and hence the dip offers a good entry point.
Image Source: Zacks Investment Research
What Makes UDR a Solid Pick?
Solid Industry Fundamentals: The company’s properties are located throughout the United States, which includes a mix of urban and suburban communities in both coastal and Sunbelt locations. In addition, UDR has a geographically-diverse portfolio with a superior product mix of A/B quality properties in urban and suburban markets.
Therefore, portfolio diversification with respect to geographies and price points limits UDR’s exposure to volatility and concentration risks alongside assuring stable cash flows.
Moreover, a favorable demographic trend in the young-adult age cohort, which has a higher propensity to rent, is likely to fuel the demand for UDR’s properties.
Technological Advancements & Process Enhancements: UDR’s technological investments and process enhancements are expected to help control future expenses and aid margin expansion and long-term profitability. The company’s Next Generation Operating Platform supports electronical interaction, provides service to residents and aids its business prospects. These efforts are likely to give the company a competitive edge over its peers.
FFO Growth: This residential REIT raised its FFO as adjusted per share guidance for 2022. It expects the same to lie in the range of $2.29-$2.33 compared with $2.25-$2.31 guided earlier.
The Zacks Consensus Estimate for the 2022 FFO per share implies a rise of 15.42% for 2022 compared with the industry’s average of 12.60% and is currently pegged at $2.32.
Balance Sheet Strength: UDR has a healthy balance-sheet position with ample liquidity. It exited second-quarter 2022 with $1.3 billion of liquidity and net debt-to-EBITDAre of 6.2X.
With a well-laddered debt maturity schedule and investment grade credit ratings of Baa1/Stable from Moody’s and a BBB+/Stable from S&P Global Ratings, UDR has enough financial flexibility to capitalize on growth opportunities.
Dividend: Solid dividend payouts are the biggest enticement for REIT investors, and UDR remains committed to that. In March 2022, the residential REIT hiked its annualized dividend by 4.7% to $1.52 per share, resulting in a quarterly dividend of 38 cents. It has maintained this payment thereafter.
UDR has increased its dividend five times in the last five years, and the five-year annualized dividend growth rate is 4.57%. Given its robust balance sheet position and a sustainable cash flow from operations, the dividend payment is likely to be sustainable in forthcoming quarters.
Other Stocks to Consider
Some top-ranked stocks from the residential REIT sector are AvalonBay Communities (AVB - Free Report) , Equity Residential (EQR - Free Report) and BRT Apartments (BRT - Free Report) .
The Zacks Consensus Estimate for AvalonBay Communities’ current-year FFO per share has moved marginally northward in the past month to $9.84. AVB currently holds a Zacks Rank #2.
The Zacks Consensus Estimate for Equity Residential’s 2022 FFO per share has moved marginally northward in the past week to $3.52. EQR presently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for BRT Apartments’ ongoing year’s FFO per share has been raised 5.8% over the past two months to $1.63. BRT sports a Zacks Rank #1 (Strong Buy) presently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.