Agree Realty Corporation’s (ADC - Free Report) board of directors has approved a 3% sequential hike in quarterly dividends for common stock. The revised dividend now comes in at 52 cents per share versus the previous figure of 50.5 cents. The new dividend will be paid on Jan 3, 2018, to shareholders of record as of Dec 20, 2017.
The cash dividend, which reflects year-over-year increase of 5.1%, is the company’s 95th consecutive dividend distribution. Agree Realty has achieved a five-year total increase of 30% in dividends since 2012. This highlights the company’s continued efforts to boost shareholders’ wealth.
Based on the increased rate, the annual dividend comes to $2.08 a share, resulting in an annualized yield of about 4.26%, considering Agree Realty’s closing price of $48.79 on Dec 5.
The company’s leverage picture looks encouraging. Its debt/equity ratio of 0.59 compares favorably with 1.25 for its industry. Also, this retail real estate investment trust (REIT) churns cash flow per share of $2.65 as compared to the industry average of $2.04. The company has witnessed robust cash flow growth in the past. Furthermore, Agree Realty’s current cash flow growth is significantly higher than the industry average. Secure cash flow will help the company sustain its dividend payout in the future.
However, sub-optimal utilization of equity has resulted in a return on equity (ROE) of 7.27%, while the industry delivered 7.44%. Also, its valuation looks stretched when compared with the industry. Agree Realty currently has a trailing 12-month price-to-FFO ratio of 18.4, which compares unfavorably with 17.1 witnessed by the industry. This limits the stock’s upside potential.
Year to date, shares of this Zacks Rank #3 (Hold) company have underperformed the industry. During the period, shares of Agree Realty have gained 6%, while the industry recorded growth of 10.2%.
Admittedly, solid dividend payouts are arguably the biggest enticement for REIT investors. Some other REITs that declared dividend hikes recently include Alexandria Real Estate Equities (ARE - Free Report) , SL Green Realty (SLG - Free Report) and Mid-America Apartment Communities (MAA - Free Report) .
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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