Alexandria Real Estate Equities Inc's Dividend Analysis
Assessing the Upcoming Dividend and Historical Performance
Alexandria Real Estate Equities Inc (NYSE:ARE) recently announced a dividend of $1.27 per share, payable on 2024-04-15, with the ex-dividend date set for 2024-03-27. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Alexandria Real Estate Equities Inc's dividend performance and assess its sustainability.
What Does Alexandria Real Estate Equities Inc Do?
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Alexandria Real Estate Equities Inc is an urban office real estate investment trust (REIT). It is engaged in the business of providing space for lease to life science, agtech, and technology tenants. The company has established a significant market presence in key locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science, agtech, and technology campuses that provide tenants with highly dynamic and collaborative environments. Alexandria also provides strategic capital to transformative life science, agtech, and technology companies through its venture capital platform.
A Glimpse at Alexandria Real Estate Equities Inc's Dividend History
Alexandria Real Estate Equities Inc has maintained a consistent dividend payment record since 1997, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 2010, earning it the status of a dividend achiever. This honor is reserved for companies that have increased their dividend each year for at least the past 14 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Alexandria Real Estate Equities Inc's Dividend Yield and Growth
Alexandria Real Estate Equities Inc currently has a 12-month trailing dividend yield of 3.95% and a 12-month forward dividend yield of 4.04%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, Alexandria Real Estate Equities Inc's annual dividend growth rate was 5.40%. This rate increased to 5.80% per year over a five-year horizon, and over the past decade, the annual dividends per share growth rate stands at 6.60%. Based on the dividend yield and five-year growth rate, the 5-year yield on cost of Alexandria Real Estate Equities Inc stock as of today is approximately 5.24%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Alexandria Real Estate Equities Inc's dividend payout ratio is 1.95, which may suggest that the company's dividend could be at risk.
Alexandria Real Estate Equities Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Alexandria Real Estate Equities Inc's profitability 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
A company must have robust growth metrics to ensure the sustainability of dividends. Alexandria Real Estate Equities Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Alexandria Real Estate Equities Inc's revenue has increased by approximately 4.20% per year on average, a rate that outperforms approximately 54.38% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Alexandria Real Estate Equities Inc's earnings increased by approximately -11.60% per year on average, a rate that outperforms approximately 23.08% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -1.30%, which outperforms approximately 37.18% of global competitors.
Next Steps
In conclusion, Alexandria Real Estate Equities Inc's commitment to increasing dividends, evidenced by its status as a dividend achiever, is commendable. However, the high dividend payout ratio raises questions about the sustainability of these payments. The company's strong profitability rank and solid growth metrics provide some reassurance, but investors should keep an eye on these figures. With a forward-looking approach, examining the company's capacity to maintain its dividend in light of its financial health and industry trends will be crucial for investors. Will Alexandria Real Estate Equities Inc continue its legacy of rewarding shareholders amidst the challenges ahead? That remains a question for value investors to ponder as they assess the company's long-term potential.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
