Last Friday, HCP Inc. (HCP) announced a 5% hike in its quarterly cash dividend rate. The company will now pay a dividend of 52.5 cents per share compared with 50 cents paid in the prior quarter. The increased dividend will be paid on Feb 19, 2013 to stockholders of record on Feb 4.
HCP has established an impressive track record of conservative capital management and cash returns to shareholders in the form of steady dividend and has hiked its dividend per share for 28 consecutive years since it became public in 1985.
HCP is the leading medical real estate investment trust (:REIT) in the U.S. with one of the largest and most diversified portfolios in the healthcare sector with exposure to all types of facilities. The product diversity of the company allows it to capitalize on opportunities in different markets based on individual market dynamics and provides a hard-to-replicate competitive advantage over its peers.
Additionally, the healthcare sector provides a steady source of income that insulates the company from short-term market volatility. With strong quarterly results, the company is well poised to maintain its growth curves and simultaneously benefit the shareholders with steadily rising dividends.
As a matter of fact, a number of REIT firms have increased their dividend payouts in recent months. This includes Vornado Realty Trust (VNO), which hiked its quarterly dividend by 5.8% to 73 cents and DDR Corp. (DDR) that raised its quarterly dividend by about 12.5% to 13.5 cents this month. Moreover, in December, lodging REIT, RLJ Lodging Trust (RLJ), increased its quarterly dividend by 24.2% to 20.5 cents per share.
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 the shareholders.
The company is scheduled to release its fourth-quarter 2012 results on Feb 12. The Zacks Consensus Estimate for the company’s fourth-quarter FFO (funds from operations) is currently pegged at 71 cents per share.
HCP Inc. currently carries a Zacks Rank #3 (Hold) and considering its fundamentals, we have a long-term Neutral recommendation on the stock.
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