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EastGroup Properties (EGP) Announces Dividend Hike: Worth a Look?

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EastGroup Properties’ EGP announced a hike of 13.9% in its quarterly dividend, raising it to 90 cents per share from 79 cents. It will be paid out on Oct 15, to shareholders on record as of Sep 30, 2021.

Based on the increase, the annual dividend rate now comes to $3.60 a share, resulting in an annualized yield of 2.1%, considering EastGroup’s closing price of $171.14 on Aug 26.

Solid dividend payouts remain the biggest enticement 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 10 years, the recent one marking its 167th consecutive quarterly distribution to shareholders. Further, EastGroup has increased or maintained its dividend for 29 consecutive years and hiked it 26 years over this period.

The stock looks attractive based on the regular rise in dividend income amid a challenging operating backdrop. Now let’s check out EastGroup Properties’ fundamentals and financial performance before taking any investment decision.

EastGroup has a decent performance, beating the Zacks Consensus Estimate in all of the trailing four quarters, on funds from operations (FFO) per share basis, the average surprise being 2.2%. Moreover, EastGroup Properties’ return on equity is 8.95%, significantly higher than the industry’s ROE of 2.68 %.

Over the next five years, the company’s FFO per share is projected to grow at a rate of 6.7%. The favorable estimate revision for the ongoing year reflects an upbeat outlook for the company. It has moved marginally upward in the past week to $5.88, indicating 8.82% year-over-year growth.

The industrial REIT, focused on the development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States, churns cash flow per share of $5.68 as compared to the industry average of $1.68. Its projected sales growth of 9.78% is above the industry average of 7.38%.

Further, the company has a well-leased industrial portfolio. As of Aug 25, EastGroup's portfolio was 98.8% leased and 96.9% occupied. Recently, it purchased DFW Global Logistics Centre, the four business distribution buildings comprising 611,000 square feet, for $89.7 million.

Amid an e-commerce boom, growth in industries and companies making efforts to improve supply-chain efficiencies, demand for logistics infrastructure and efficient distribution networks has been shooting up. This is aiding the industrial real estate market to prosper.

In addition, apart from the fast adoption of e-commerce, logistics real estate is anticipated to benefit from a likely increase in inventory levels post the global health crisis, offering scope to industrial landlords, including EastGroup, Duke Realty DRE, Prologis PLD and Rexford Industrial Realty, Inc. REXR, to enjoy a favorable market environment.

Particularly for EastGroup, we believe such deployment activity highlights the company’s operational strength and commitment toward 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.

Investors are always on the lookout for companies with a track record of consistent and incremental dividend payments to put their money in. Such moves will boost investors’ confidence in the stock.

In the past six months, the company’s shares have rallied 24.2%, outperforming the industry’s growth of 18.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research
Zacks Investment Research


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.


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Prologis, Inc. (PLD) : Free Stock Analysis Report

Duke Realty Corporation (DRE) : Free Stock Analysis Report

EastGroup Properties, Inc. (EGP) : Free Stock Analysis Report

Rexford Industrial Realty, Inc. (REXR) : Free Stock Analysis Report

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