Mid-America Apartment Communities Inc's Dividend Analysis

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An In-depth Look at the Dividend Performance and Sustainability of Mid-America Apartment Communities Inc

Mid-America Apartment Communities Inc (NYSE:MAA) recently announced a dividend of $1.4 per share, payable on 2023-10-31, with the ex-dividend date set for 2023-10-12. 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 Mid-America Apartment Communities Inc's dividend performance and assess its sustainability.

What Does Mid-America Apartment Communities Inc Do?

Mid-America Apartment Communities Inc, or MAA, is a real estate investment trust engaged in the acquisition, operation, and development of multifamily apartment communities located in southeastern and southwestern United States. The company operates two reportable segments; Same Store and Non-Same Store and Other. The Same Store segment includes communities that the company has owned and have been stabilized for at least a full 12 months as of the first day of the calendar year. The Non-Same Store and Other segment includes recently acquired communities, communities being developed or in lease-up, communities that have been disposed of, communities that have experienced a significant casualty loss, and stabilized communities that do not meet the requirements to be Same Store communities. The key revenue comes from the Same Store segment.

Mid-America Apartment Communities Inc's Dividend Analysis
Mid-America Apartment Communities Inc's Dividend Analysis

A Glimpse at Mid-America Apartment Communities Inc's Dividend History

Mid-America Apartment Communities Inc has maintained a consistent dividend payment record since 1994. Dividends are currently distributed on a quarterly basis. The company has increased its dividend each year since 1994, earning it the title of a dividend aristocrat, a distinction given to companies that have increased their dividend each year for at least the past 29 years.

Mid-America Apartment Communities Inc's Dividend Analysis
Mid-America Apartment Communities Inc's Dividend Analysis

Breaking Down Mid-America Apartment Communities Inc's Dividend Yield and Growth

As of today, Mid-America Apartment Communities Inc currently has a 12-month trailing dividend yield of 4.11% and a 12-month forward dividend yield of 4.21%. This suggests an expectation of increased dividend payments over the next 12 months.

Over the past three years, Mid-America Apartment Communities Inc's annual dividend growth rate was 6.80%. Extended to a five-year horizon, this rate decreased to 5.40% per year. And over the past decade, Mid-America Apartment Communities Inc's annual dividends per share growth rate stands at 5.50%.

Based on Mid-America Apartment Communities Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Mid-America Apartment Communities Inc stock as of today is approximately 5.35%.

Mid-America Apartment Communities Inc's Dividend Analysis
Mid-America Apartment Communities Inc's Dividend Analysis

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 2023-06-30, Mid-America Apartment Communities Inc's dividend payout ratio is 1.04. This may suggest that the company's dividend may not be sustainable.

Mid-America Apartment Communities Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Mid-America Apartment Communities Inc's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of the years 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. Mid-America Apartment Communities Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.

Revenue is the lifeblood of any company, and Mid-America Apartment Communities Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Mid-America Apartment Communities Inc's revenue has increased by approximately 8.00% per year on average, a rate that outperforms approximately 78.04% 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, Mid-America Apartment Communities Inc's earnings increased by approximately 21.30% per year on average, a rate that outperforms approximately 71.75% of global competitors.

Lastly, the company's 5-year EBITDA growth rate of 17.10%, which outperforms approximately 77.24% of global competitors.

Conclusion

In conclusion, Mid-America Apartment Communities Inc has demonstrated a consistent track record of dividend payments. However, its high payout ratio raises concerns about the sustainability of future dividends. On the other hand, the company's strong profitability and growth metrics suggest that it has the potential to continue its dividend payments. Investors should monitor these factors closely to make informed decisions.

GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.

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.

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