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Four Corners (FCPT) Rewards Investors With Dividend Raise
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Four Corners Property Trust (FCPT - Free Report) recently announced a 1.5% increase in its quarterly cash dividend to 34.50 cents per share for the fourth quarter of 2023 from 34.00 cents paid out earlier.
The increased dividend will be paid out on Jan 12, 2024, to shareholders on record as of Dec 29, 2023. The latest dividend rate marks an annualized amount of $1.38 per share compared with the previous rate of $1.36.
Solid dividend payouts are the biggest enticements for real estate investment trust (REIT) investors, and FCPT has remained committed to that even during the pandemic. Post the dividend hike, the annual dividend yield now comes to 6.3% based on the company’s share price of $21.87 on Nov 12, 2023. The company has increased its dividend five times in the last five years and has a five-year annualized dividend growth rate of 4.61%. Check Four Corners’ dividend history here.
This REIT is mainly engaged in the ownership and acquisition of high-quality, net-leased restaurant and retail properties. It usually leases its properties to creditworthy tenants through net lease arrangements. This shifts most of the costs relating to the properties to the tenant, paving the way for stable rental revenue generation.
Also, the company’s efforts to invest in additional restaurant and retail properties to expand and diversify its existing portfolio bode well. In the nine months ended Sep 30, 2023, FCPT acquired 90 properties for $328.5 million, inclusive of transaction costs. The properties are 100% occupied under net leases with a weighted average remaining lease term of 11.9 years.
FCPT maintains a healthy balance sheet position and had around $237 billion of available liquidity as of Sep 30, 2023. It also enjoys credit ratings of BBB and Baa3 with stable outlook from Fitch and Moody’s, respectively, enabling it to procure debt financing at attractive costs.
Further, it has a well-laddered debt maturity with minimal near-term debt maturities prior to November 2025, and 100% of its assets are unencumbered, providing ample financial flexibility to bank on growth opportunities.
Hence, given FCPT’s ability to generate decent cashflows, a lower debt-equity ratio compared with the industry and a solid financial position, we expect the latest dividend rate to be sustainable over the long run.
However, in the near term, the company’s expansion might face potential headwinds in a high interest rate environment, which could increase borrowing costs for future acquisitions.
Shares of this Zacks Rank #3 (Hold) company have lost 15.7% in the year-to-date period compared with the real estate market's decline of 7.7%.
The Zacks Consensus Estimate for Welltower’s current-year funds from operations (FFO) per share has moved marginally northward over the past week to $3.58.
The Zacks Consensus Estimate for Boston Properties’ ongoing year’s FFO per share has been raised marginally over the past two months to $7.30.
The Zacks Consensus Estimate for EastGroup Properties’ 2023 FFO per share has moved marginally upward in the past month to $7.66.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Four Corners (FCPT) Rewards Investors With Dividend Raise
Four Corners Property Trust (FCPT - Free Report) recently announced a 1.5% increase in its quarterly cash dividend to 34.50 cents per share for the fourth quarter of 2023 from 34.00 cents paid out earlier.
The increased dividend will be paid out on Jan 12, 2024, to shareholders on record as of Dec 29, 2023. The latest dividend rate marks an annualized amount of $1.38 per share compared with the previous rate of $1.36.
Solid dividend payouts are the biggest enticements for real estate investment trust (REIT) investors, and FCPT has remained committed to that even during the pandemic. Post the dividend hike, the annual dividend yield now comes to 6.3% based on the company’s share price of $21.87 on Nov 12, 2023. The company has increased its dividend five times in the last five years and has a five-year annualized dividend growth rate of 4.61%. Check Four Corners’ dividend history here.
This REIT is mainly engaged in the ownership and acquisition of high-quality, net-leased restaurant and retail properties. It usually leases its properties to creditworthy tenants through net lease arrangements. This shifts most of the costs relating to the properties to the tenant, paving the way for stable rental revenue generation.
Also, the company’s efforts to invest in additional restaurant and retail properties to expand and diversify its existing portfolio bode well. In the nine months ended Sep 30, 2023, FCPT acquired 90 properties for $328.5 million, inclusive of transaction costs. The properties are 100% occupied under net leases with a weighted average remaining lease term of 11.9 years.
FCPT maintains a healthy balance sheet position and had around $237 billion of available liquidity as of Sep 30, 2023. It also enjoys credit ratings of BBB and Baa3 with stable outlook from Fitch and Moody’s, respectively, enabling it to procure debt financing at attractive costs.
Further, it has a well-laddered debt maturity with minimal near-term debt maturities prior to November 2025, and 100% of its assets are unencumbered, providing ample financial flexibility to bank on growth opportunities.
Hence, given FCPT’s ability to generate decent cashflows, a lower debt-equity ratio compared with the industry and a solid financial position, we expect the latest dividend rate to be sustainable over the long run.
However, in the near term, the company’s expansion might face potential headwinds in a high interest rate environment, which could increase borrowing costs for future acquisitions.
Shares of this Zacks Rank #3 (Hold) company have lost 15.7% in the year-to-date period compared with the real estate market's decline of 7.7%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Welltower (WELL - Free Report) , Boston Properties (BXP - Free Report) and EastGroup Properties (EGP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Welltower’s current-year funds from operations (FFO) per share has moved marginally northward over the past week to $3.58.
The Zacks Consensus Estimate for Boston Properties’ ongoing year’s FFO per share has been raised marginally over the past two months to $7.30.
The Zacks Consensus Estimate for EastGroup Properties’ 2023 FFO per share has moved marginally upward in the past month to $7.66.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.