3 REITs That Just Raised Their Dividends

Investors are always happy when a company they own increases its dividend. After all, as an income investor, you just got a raise.

But the increases often mean more than just a company's generosity. Dividend increases can also be an indication that the company believes its future earnings will be sufficient to cover the increase granted to shareholders.

This is especially true for real estate investment trusts (REITs), which are required by law to return at least 90% of their taxable income to shareholders in the form of dividends. A dividend increase can be an indirect way of telling shareholders that their taxable income may soon increase.

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Take a look at three REITs that announced dividend increases this week:

Essential Properties Realty Trust Inc. (NYSE: EPRT) is a Princeton, New Jersey-based diversified REIT that owns and manages single-tenant, net-lease properties for service-oriented and experience-based businesses. Essential Properties was founded in 2016 and has a market capitalization of $3.68 billion. The portfolio includes 1,688 properties in 48 states. The occupancy rate of the properties is 99.8%.

On April 26, Essential Properties reported its first quarter operating results. Adjusted working capital (AFFO) of $0.40 was in line with estimates. Revenue of $83.69 million exceeded estimates by $4.63 million and was 19.4% higher than revenue for the first quarter of 2022. In addition, Essential Properties raised its previous 2023 AFFO guidance from 1, $58-$1.64 to $1.60-$1.64 per share.

On June 12, Essential Properties also announced an increase in its quarterly dividend from $0.275 to $0.28 per share. The dividend is payable on July 14 to shareholders of record as of June 30. The annual dividend of $1.12 per share yields 4.57%. The payout ratio is a moderate 66%.

Realty Income Corp. (NYSE: O) is a San Diego-based triple net lease retail REIT with over 12,400 properties worldwide. The “Monthly Dividend Company,” as it's commonly known, is a member of the S&P 500 and an S&P 500 Dividend Aristocrat with 635 consecutive monthly dividend payments and 121 dividend increases since 1994. It's one of the most popular REITs among investors today.

Funds from operations (FFO) of $1.04 per share exceeded both estimates and first quarter 2022 FFO by $0.03 per share. Revenue of $944.39 million beat estimates by $61.31 million and was 17% better than revenue of $643.26 million for the first quarter of 2022.

Realty Income also raised its full-year 2023 FFO per share guidance to $4.05-$4.15 from $4.01-$4.03 and announced that the first quarter ended with an occupancy rate of 99 % was completed. Numbers like these are why Realty Income is able to increase its dividend so frequently.

On June 13, Realty Income announced an increase in its monthly dividend from $0.255 to $0.2555 per share. The forward yield is now 5.01%. The dividend is payable on July 14 for shareholders of record on July 3. The ex-dividend date is June 30th.

Host Hotels & Resorts Inc. (NYSE: HST) is a Bethesda, Maryland-based hotel REIT that bills itself as “the world's largest lodging REIT.” It is an S&P 500 company that owns and operates 41,900 rooms in 77 hotels in 20 of the largest markets in the US and an additional five hotels in Canada and Brazil. It was founded in 1993 and has a market capitalization of $11.9 billion.

Most Host Hotels properties are upscale and luxury hotels in central business districts, conveniently located near airports. Hotels generally have amenities like restaurants and lounges, swimming pools, gyms, and gift shops. Of the 78 hotels, 28 have over 500 rooms.

On May 3, Host Hotels & Resorts announced its first quarter operating results. FFO of $0.54 beat estimate by $0.06 and was 41.03% above earnings per share of $0.39 in Q1 2022. Revenue of $1.38 billion -$ exceeded estimate of $1.31 billion and was 28.58% above sales of $1.07 billion in Q1 2022 2022.

Following the improved earnings, Host Hotels & Resorts announced on June 14 a 25 percent increase in its second-quarter dividend to $0.15 per share from $0.12. The expected annual dividend of $0.60 now yields 3.43%, and the payout ratio from operations is still a very reasonable 31.4%.

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This article, 3 REITs That Just Raised Dividends, originally appeared on Benzinga.com


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