AvalonBay Communities Inc's Dividend Analysis
Unveiling the Dividend Profile of AvalonBay Communities Inc
AvalonBay Communities Inc (NYSE:AVB) recently announced a dividend of $1.65 per share, payable on January 16, 2024, with the ex-dividend date set for December 28, 2023. 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 AvalonBay Communities Inc's dividend performance and assess its sustainability.
What Does AvalonBay Communities Inc Do?
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AvalonBay Communities owns a portfolio of 276 apartment communities with over 82,000 units and is developing 18 additional properties with over 5,700 units. The company focuses on owning large, high-quality properties in major metropolitan areas of New England, New York/New Jersey, Washington D.C., California, and the Pacific Northwest.
A Glimpse at AvalonBay Communities Inc's Dividend History
AvalonBay Communities Inc has maintained a consistent dividend payment record since 1994. Dividends are currently distributed on a quarterly basis.
AvalonBay Communities Inc has increased its dividend each year since 1994. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 29 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down AvalonBay Communities Inc's Dividend Yield and Growth
As of today, AvalonBay Communities Inc currently has a 12-month trailing dividend yield of 3.49% and a 12-month forward dividend yield of 3.52%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, AvalonBay Communities Inc's annual dividend growth rate was 1.50%. Extended to a five-year horizon, this rate increased to 2.50% per year. And over the past decade, AvalonBay Communities Inc's annual dividends per share growth rate stands at 5.10%.
Based on AvalonBay Communities Inc's dividend yield and five-year growth rate, the 5-year yield on cost of AvalonBay Communities Inc stock as of today is approximately 3.95%.
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 September 30, 2023, AvalonBay Communities Inc's dividend payout ratio is 0.99, which may suggest that the company's dividend may not be sustainable.
AvalonBay Communities Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks AvalonBay Communities Inc's profitability 7 out of 10 as of September 30, 2023, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. AvalonBay Communities Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and AvalonBay Communities Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. AvalonBay Communities Inc's revenue has increased by approximately 3.60% per year on average, a rate that outperforms approximately 62.36% 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, AvalonBay Communities Inc's earnings increased by approximately -1.50% per year on average, a rate that outperforms approximately 44.09% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -6.20%, which outperforms approximately 27.27% of global competitors.
Next Steps
Considering AvalonBay Communities Inc's consistent dividend history, modest growth in its dividend payments, and a payout ratio that may raise sustainability concerns, investors should weigh the company's strong profitability and growth metrics against these factors. AvalonBay Communities Inc's ability to maintain positive net income and its competitive revenue growth suggest a solid foundation that may support future dividends. However, the payout ratio indicates a need for careful monitoring. As the company navigates through evolving market conditions, value investors should consider if AvalonBay Communities Inc aligns with their investment strategy for stable and growing income streams.
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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.
