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Alexandria (ARE) Hikes Quarterly Dividends: Time to Hold?

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Ushering in good news for its shareholders, Alexandria Real Estate Equities, Inc.’s (ARE - Free Report) board of directors announced a 3% hike in the company's quarterly dividend rate to 93 cents from 90 cents paid in the previous quarter. The new dividend is scheduled to be paid on Jul 16, to shareholders of record as of Jun 29, 2018.

Based on the increased rate, the annual dividend comes to $3.72 per share, up from the prior annual rate of $3.6 per share. This leads to an annualized yield of 2.9%, considering the retail real estate investment trust’s (REIT) closing price of $127.2 on Jun 4.

Notably, solid dividend payouts are arguably the biggest enticement for real estate investment trusts (REIT) investors and Alexandria had earlier announced a 5% sequential hike in its fourth-quarter 2017 dividend. This reflects the company’s continued efforts to improve shareholder wealth.

Per management, this hike is in sync with the Pasadena, CA-based REIT’s strategy of sharing growth in cash flows from operating activities with the stockholders, while also retaining a significant portion to reinvest in its strong development and redevelopment pipeline that comprises new Class A properties. Also, as of Mar 31, 2018, the funds from operations (FFO) payout ratio remained at 56%, which is a favorable level. Hence, this dividend is expected to remain sustainable.

In fact, Alexandria has robust fundamentals to back dividend hikes. In fact, the company has been a decent performer, beating the Zacks Consensus Estimate in two of the past four quarters, on funds from operations (FFO) per share basis, with an average positive surprise of 0.48%.

As investors prefer an income-generating stock, a high dividend-yielding one is obviously much coveted. Needless to say, investors are always on the lookout for companies with a track record of consistent and incremental dividend payments to invest their money in.

This Zacks Rank #3 (Hold) company has outperformed its industry in the past six months. Shares of Alexandria have inched up 1%, as against the industry’s loss of 3.2%.


 

Stocks Worth a Look

A few better-ranked stocks from the same space are Arbor Realty Trust (ABR - Free Report) , Lamar Advertising Company (LAMR - Free Report) and Prologis, Inc. (PLD - Free Report) . All three stocks carry a Zacks Rank of 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 has risen 14.4% to $1.03 in a month’s time. Its shares have returned 15.5% over the past year.

Lamar’s FFO per share estimates for the current year remained unchanged at $5.34 in the past month. Its shares have gained 1.1% in a year’s time.

Prologis’ FFO per share estimates for 2018 have inched up 0.7% to $2.98 over the past month. Its shares have appreciated 17.3% over the past year.

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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