In tune with its efforts to enhance stockholders’ return, Education Realty Trust Inc. (EDR) (commonly known as “EdR”) raised its quarterly cash dividend sequentially by 10% to 11 cents per share from 10 cents. The new dividend will be paid on Aug 15, 2013 to shareholders of record as of Jul 31, 2013.
EdR has a consistent track record of increasing shareholder wealth. Notably, in the third quarter of 2012, the company had increased its annual dividend by 43% to 40 cents from 28 cents per share paid earlier. Prior to that, in the third quarter of 2011, the company had increased its annual dividend by 40% to 28 cents from 20 cents per share.
Notably, a steady dividend payout is in line with the long-term strategy of the company to provide attractive risk-adjusted returns to its stockholders. The announced quarterly dividend rate at this real estate investment trust (:REIT) equates to an annualized rate of common stock dividend of 44 cents per share, resulting in a yield of over 4.2% based on the closing price of EdR’s stock on Jul 15.
As a matter of fact, EdR maintains a conservative capital structure with well-staggered debt maturities. As of Mar 31, 2013, the company had cash and cash equivalents of $14.5 million and $278.4 million available on its unsecured revolving credit facility.
EdR is one of the leading owners, developers and managers of collegiate housing in the U.S. The company owns or manages 65 communities in 24 states with around 36,000 beds. The ideal acquisition targets of the company are generally located in markets that have stable or increasing collegiate populations and high barriers to entry.
Recently, the company disclosed the addition of 92 apartments next to the University of Connecticut. The company is planning the development of a third phase at The Oaks on The Square in Storrs Center, beside the university. The development is aimed at strengthening EdR's market dominance while solidifying its presence at the University of Connecticut.
Hence, with strong fundamentals and opportunistic acquisitions, we believe that the company is well poised to maintain its growth curves and simultaneously reward shareholders with steadily rising dividends.
Notably, a number of REIT firms have raised their quarterly dividend payouts in recent months. These firms include Host Hotels & Resorts Inc. (HST), Post Properties Inc. (PPS) and Alexandria Real Estate Equities Inc. (ARE).
Solid dividend payouts are arguably the biggest attraction for REIT investors as the U.S. law requires these companies to distribute 90% of their annual taxable income in the form of dividends to shareholders.
EdR currently carries a Zacks Rank #3 (Hold).
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