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Agree Realty (ADC) Cheers Investors With 3.8% Dividend Hike

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Ushering in good news for its shareholders, Agree Realty Corporation’s (ADC - Free Report) board of directors announced a 3.8% hike in the company's quarterly dividend rate to 54 cents from 52 cents paid earlier. The new dividend is scheduled to be paid on Jul 13, to shareholders of record as of Jun 29, 2018.

Based on the increased rate, the annual dividend comes to $2.16 per share, up from the prior annual rate of $2.08 per share. This leads to an annualized yield of 4.33%, considering the retail real estate investment trust’s (REIT) closing price of $49.93 on May 15.

Solid dividend payouts remain arguably the biggest enticement for REIT investors and Agree Realty remains committed to boosting shareholders’ wealth. The cash dividend, which reflects a year-over-year increase of 6.9%, is the 97th consecutive dividend distribution of the company.

Agree Realty’s leverage picture looks encouraging. Its debt/equity ratio of 0.61 compares favorably with 1.09 for its industry. Also, this retail REIT churns cash flow per share of $3.11 compared with the industry average of $2.14. It witnessed robust cash flow growth in the past. Furthermore, the company’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 of 6.97%, while the industry delivered 6.99%. Also, its valuation looks stretched when compared with the industry. Agree Realty currently has a trailing 12-month price-to-FFO ratio of 17.4, which compares unfavorably with 13.2 witnessed by the industry. This limits the stock’s upside potential.

In the past three months, shares of this Zacks Rank #3 (Hold) company have outperformed the industry. During the period, shares of Agree Realty have gained 7.2% while the industry declined 1.2%.



Stocks Worth a Look

A few better-ranked stocks from the REIT space include Arbor Realty Trust (ABR - Free Report) , Prologis, Inc. (PLD - Free Report) and Chatham Lodging Trust (CLDT - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arbor Realty Trust’s Zacks Consensus Estimate for 2018 FFO per share rose 14.4% to $1.03 over the past month. Its shares have returned 17.6% in the past 12 months.

Prologis’ FFO per share estimates for the current year inched up 1.7% to $2.96 in a month’s time. Its shares have gained 16.1% over the past 12 months.

Chatham Lodging’s FFO per share estimates for 2018 witnessed rise of 1% and moved to $1.93 over the past month. The stock has gained 2.3% in the past 12 months.

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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