Ushering in good news for its shareholders, Mid-America Apartment Communities (MAA - Free Report) recently announced a 6% hike in its quarterly cash dividend. The company will now pay a dividend of 92.25 cents per share, up from 87 cents paid earlier. The raised dividend will be paid on Jan 31, 2018 to shareholders of record as on Jan 12.
Based on the increased rate, the annual dividend comes to $3.69 a share, resulting in a yield of about 3.6%, considering Mid-America Apartment’s closing price of $101.41 on Dec 5. Since the company’s dividend yield surpasses the industry average of 3.4%, the stock is likely to draw investors’ attention.
In fact, solid dividend payouts are arguably the biggest enticement for REIT investors and this represents Mid-America Apartment’s 8th consecutive hike in annual common stock dividend.
Mid-America Apartment has solid fundamentals to back dividend hikes. It is a residential real estate investment trust (REIT) engaged in owning, acquiring, operating and selective development of apartment communities. As of Sep 30, 2017, the company enjoyed ownership in 99,612 apartment units across 17 states. In addition, the company had ownership interest in four commercial properties spanning 232,000 square feet of combined gross leasable area.
Mid-America Apartment’s ROE is 4.2%, higher than the industry average of 2.8%. Further, the company is one of only three apartment REITs that did not reduce or suspend dividend payments during the last recession.
Also, Mid-America Apartment enjoys a solid balance sheet with lower leverage, improved investment grade metrics and limited near-term maturities. As of Sep 30, 2017, the company had around $795.4 million of combined cash and capacity available under its unsecured credit facility. Moreover, at the end of third-quarter 2017, 85% of net debt was hedged against interest rate volatility at an average effective interest rate of 3.5%.
Mid-America Apartment currently has a Zacks Rank #3 (Hold).
In the past 12 months, shares of Mid-America Apartment have outperformed the industry. While the company’s shares have gained 13.9%, the industry has recorded growth of 9.6% during this period.
Some better-ranked stocks in the REIT space are One Liberty Properties (OLP - Free Report) and Arbor Realty Trust (ABR - Free Report) , sporting a Zacks Rank of 1 (Strong Buy), and Columbia Property Trust (CXP - Free Report) , carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
One Liberty Properties’ FFO per share estimates for 2017 witnessed an upward revision of 7.1% over the past month. Its share price has gained 13.6% in six months’ time.
Columbia Property Trust’s FFO per share estimates for the current year have moved up by 2.7% in a month’s time. Over the past six months, the company’s shares have gained 1.9%.
Arbor Realty Trust’s FFO per share estimates for 2017 increased by 8.7% over the past month. Its shares have gained 4.4% in the past six months.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. 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.
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