UDR, Inc. (UDR - Free Report) recently rewarded investors with a 5.1% annualized common dividend increase for 2020. For first-quarter 2020, the company will now pay 36 cents per share, higher than the prior dividend of 34.25 cents. This marks UDR’s 190th consecutive quarterly dividend distribution on its common stock.
Based on the hiked rate of 36 cents for the quarter, the annual dividend comes to $1.44 per share. This new dividend will be paid on Apr 30, to shareholders of record on Apr 10, 2020. At this new rate, annualized yield comes at roughly 4.27%, based on the stock’s closing price of $33.76 on Mar 19.
The latest hike reflects the residential real estate investment trust’s (REIT) ability to generate solid cash-flow growth through its operating platform and high-quality portfolio. With a current cash flow growth rate of 8.5% and a projected growth rate of 5.8% for current-year funds from operations per share, higher than the industry’s average of 5.3%, the increased dividend is likely to be sustainable.
UDR’s fourth-quarter 2019 funds from operations, as adjusted per share of 54 cents, came in higher than the prior-year quarter’s 50 cents. Results reflected year-over-year growth in same-store net operating income and weighted average same-store physical occupancy.
UDR continues to focus on its strategic priorities such as disciplined capital allocation, maintaining a strong balance sheet as well as cash-flow enhancement to support operational efficiency and dividend growth. This, along with the company’s robust operating platform and efficient management team, will likely help it execute strategic priorities and drive net asset value and dividend growth. In fact, as of Dec 31, 2019, the company had $866.5 million of liquidity through a combination of cash and undrawn capacity on its credit facilities.
Notably, solid dividend payouts remain arguably the biggest attraction for REIT investors as the U.S. law requires these companies to distribute 90% of the annual taxable income in the form of dividends to shareholders. Apart from UDR, recently Realty Income Corporation (O - Free Report) announced its 106th common stock monthly dividend hike, since the company’s NYSE listing in 1994. The company will now pay 23.30 cents per share compared with the 23.25 cents paid earlier. (Read more: Realty Income Hikes Monthly Dividend for 106th Time)
UDR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, shares of the company have declined 27.7% year to date, reflecting broader market concerns for the coronavirus outbreak. Nevertheless, it is narrower than the industry’s decline of 30.7%.
Stocks to Consider
Highwoods Properties (HIW - Free Report) currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for the current-year FFO per share moved marginally upward to $3.63 over the past two months.
Piedmont Office Realty Trust (PDM - Free Report) holds a Zacks Rank of 2, at present. The company’s FFO per share estimate for 2020 moved 3.2% north to $1.96 in two months’ time.
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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