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CubeSmart (CUBE) Hikes Dividend by 11.1% on Solid Cash Flow

Zacks Equity Research

Ushering in good news for its shareholders, self-storage REIT CubeSmart CUBE announced an 11.1% hike in its quarterly dividend rate to 30 cents from 27 cents paid earlier. The company will pay the raised dividend for the fourth quarter on Jan 16, 2018, to shareholders on record as of Jan 2, 2018.

Based on the increased rate, the annual dividend comes to $1.20 per share, up from the prior annual rate of $1.08 per share, leading to an annualized yield of 4.08%, considering CubeSmart's closing price of $29.39 on Dec 15.

Per the company’s chief executive officer, the company’s operating platform and high quality portfolio led to solid cash flow growth, resulting in the dividend hike.

Solid dividend payouts remain arguably the biggest enticement for REIT investors and CubeSmart remains committed toward boosting shareholders’ wealth. The company has steadily raised its dividend since 2010, increasing it from 10 cents on an annualized basis in 2010 to $1.08 in 2017. The most recent hike of more than 11% to $1.20 continues the trend and with the dividend yield surpassing the industry average of 4%, the stock is likely to draw investors’ attention.

This Zacks Rank #2 (Buy) company remains well poised to capitalize on encouraging prospects of the industry and benefit shareholders accordingly. It enjoys a solid operating performance and adheres to conservative balance-sheet management. In fact, the company enjoys an investment grade balance sheet and access to wide range of capital sources. Moreover, its debt maturity schedule as of Sep 30, 2017, is well staggered. Also, reflecting optimal utilization of equity, CubeSmart’s ROE is 7.58%, higher than the industry average of 5.78%.

CubeSmart has also been a steady performer having surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 2.58%. Also, it has been witnessing decent estimate revisions for the past few months, suggesting increasing optimism on the firm’s prospects for both the short and long terms.

Shares of CubeSmart have outperformed the industry it belongs to in the past three months. The company’s shares have rallied 11.6%, while the industry has inched up 0.5% during the same time period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Apart from Cubesmart, a number of REITs have announced dividend hikes in recent times. Notable among them are Mid-America Apartment Communities, Inc. MAA, Ventas, Inc. VTR and SL Green Realty Corp. SLG.

Mid-America Apartment Communities approved a 6% hike to its common dividend rate for fiscal 2018. Ventas raised the fourth-quarter 2017 dividend by 2% to 79 cents per share. Further, SL Green announced a 4.8% increase in its fourth-quarter dividend and will now pay a dividend of 81.25 cents per share.

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