East Group Properties (EGP), a real estate investment trust (:REIT), has recently increased its quarterly dividend by 2.0% from 52 cents to 53 cents per share, which equates to an annual dividend payout of $2.12. The dividend is payable on September 28, 2012 to shareholders of record on September 18.
For the past 20 years, the company has paid uninterrupted dividends to its shareholders, while increasing it 17 times on a trot. The current dividend represents the 131st consecutive quarterly payout by East Group.
A steady dividend payout facilitates the long term strategy of East Group to provide risk-adjusted returns to its shareholders. The company has also historically promulgated a dividend reinvestment and direct stock purchase plan through which stockholders may purchase additional shares of the company by reinvesting some or all of the cash dividends received on the common shares.
Solid dividend payouts are arguably the best enticement for REIT investors as U.S. law requires REITs to distribute 90% of their annual taxable income in the form of dividend to shareholders.
Earlier in the second quarter of 2012, East Group paid cash dividend of 52 cents per share. The company's dividend payout ratio to funds from operations was 68% for the last reported quarter.
East Group develops and operates industrial properties in major Sunbelt markets across the U.S. with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina. The company’s growth strategy primarily hinges on acquiring leading business distribution facilities located near major transportation centers
East Group currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Duke Realty Corp (DRE) also holds a Zacks #3 Rank.
Note: Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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