DDR Corp. (DDR), a real estate investment trust (:REIT), has recently declared a quarterly dividend of 12 cents per share for the third quarter of 2012. The dividend marks a two-fold increase compared to that in the year-earlier quarter. The common stock dividend is payable on October 2, 2012 to shareholders of record at the close of business on September 14.
If the current dividend is maintained for the remainder of the year, the annualized dividend payout of the company would be 48 cents per share. This would represent a phenomenal back-to-back year-over-year dividend hike for DDR with a 175.0% and 118.2% increase in dividend for full year 2011 and 2012, respectively.
The stellar dividend hikes denote continued strong performances by the company backed by solid operating results and diligent execution of its strategic plan. DDR has followed a significant redevelopment program, disciplined acquisition policy, and monetization of non-income producing assets.
DDR has long been minimizing ground-up development spending in its domestic portfolio, and instead started allocating capital to the lease-up of existing projects. These redevelopments have created a growth opportunity for the company’s existing assets without the level of risk or capital required for new development.
This in turn has enabled DDR to de-lever the balance sheet and generate considerable cash flow for portfolio reinvestment, as well as increase the cash distribution to its shareholders.
In tune with its long-term strategic objectives of restructuring the overall portfolio by upgrading the quality of shopping centers and improving the balance sheet by reducing leverage, DDR also completed approximately $1.6 billion of acquisitions and asset sale transactions in the second quarter of 2012.
Headquartered in Beachwood, Ohio, DDR acquires, owns, develops, leases and manages shopping centers and business centers across 39 states in the U.S., along with Puerto Rico and Brazil. Currently, DDR owns and manages 459 retail operating (primarily open-air, value-oriented shopping centers) and development properties spanning approximately 117 million square feet.
We maintain our Neutral recommendation on DDR for the long term. The company presently has a Zacks #3 Rank, which translates into a short-term Hold rating. We also have a Neutral recommendation and a Zacks #2 Rank (short-term Buy rating) for Kimco Realty Corporation (KIM), one of the competitors of DDR.
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