EastGroup (EGP) Rewards Investors, Hikes Quarterly Dividend
EastGroup Properties EGP announced a hike of 1.6% in its quarterly dividend, raising it to $1.27 per share from $1.25. It will be paid out on Oct 13 to shareholders on record as of Sep 29, 2023.
Based on the increase, the annual dividend rate now comes to $5.08 a share, resulting in an annualized yield of 2.9%, considering EastGroup’s closing price of $177.76 on Aug 25. Moreover, the company notes that projected total dividends per share for 2023 are expected to mark an increase of 7.2% over total dividends declared in 2022.
Solid dividend payouts remain the biggest enticements for REIT investors, and quite encouragingly, EastGroup Properties is committed to boosting shareholder wealth. The company has hiked its dividend in each of the last 12 years, the recent one marking its 175th consecutive quarterly distribution to shareholders. Further, EGP increased or maintained its dividend for 31 consecutive years and hiked it for 28 years during this period.
The stock looks attractive based on the regular rise in the dividend income amid a challenging environment. Now, let’s check out EastGroup Properties’ fundamentals and financial performance before taking any investment decision.
This industrial REIT focuses on the development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States. With its focus on the ownership of premier distribution facilities usually clustered near major transportation features in supply-constrained submarkets, EastGroup has a well-leased industrial portfolio. The company’s operating portfolio was 98.5% leased and 98.2% occupied as of Jun 30, 2023. Also, the average occupancy of the operating portfolio was 98.1% for the second quarter of 2023.
EastGroup has a decent performance. It beat the Zacks Consensus Estimate in three of the trailing four quarters and matched on one occasion on funds from operations (FFO) per share basis, the average surprise being 0.98%. Moreover, EastGroup Properties’ return on equity (“ROE”) is 8.04%, significantly higher than the industry’s ROE of 2.93%.
Over the next five years, the company’s FFO per share is projected to grow at a rate of 6.90%. The favorable estimate revision for the ongoing year reflects an upbeat outlook for the company. It has moved 1.1% upward in the past month to $7.62, indicating 8.86% year-over-year growth.
This industrial REIT churns cash flow of $7.80 per share compared with the industry’s average of $1.87. Its projected sales growth of 14.86% is higher than the industry’s average of 3.82%.
Amid an e-commerce boom, growth in industries and companies making efforts to improve supply-chain efficiencies, the demand for logistics infrastructure and efficient distribution networks has been shooting up. This is aiding the industrial real estate market to prosper.
Apart from the fast adoption of e-commerce, industrial real estate space is anticipated to gain traction over the long run from a likely rise in the inventory levels of companies as a precaution for any supply-chain disruption. This will offer opportunities to industrial landlords, including EastGroup, Prologis PLD and First Industrial Realty Trust FR, to enjoy a favorable market environment.
Particularly for EastGroup, we believe such deployment activity highlights the company’s operational strength and commitment to rewarding its shareholders handsomely. The latest hike reflects the company’s ability to generate solid cash flow growth through its operating platform and high-quality portfolio.
In the last five years, EastGroup has increased its dividend six times, and the annualized dividend growth rate for this period is 15.03%. This is attractive to income investors and represents a steady income stream. Check EastGroup Properties’ dividend history here.
Investors are always on the lookout for companies with a track record of consistent and incremental dividend payments to put their money on. Such moves will boost investors’ confidence in the stock.
The company’s shares have rallied 9.2%, outperforming the industry’s growth of 0.8% in the past three months.
Image Source: Zacks Investment Research
EastGroup currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Prologis carries a Zacks Rank of 3 at present. Prologis’ long-term growth rate is projected at 9%. The Zacks Consensus Estimate for PLD’s 2023 FFO per share has been revised marginally upward in the past month to $5.59.
First Industrial Realty Trust has a Zacks Rank of 3 at present. First Industrial Realty’s 2023 revenues are expected to increase 13.07% year over year. The Zacks Consensus Estimate for FR’s 2023 FFO per share has been revised marginally upward in the past month to $2.43.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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