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REITs Announce Hike in Dividend: BFS, MAA, VTR and More

Zacks Equity Research

Anticipations of an upcoming rate hike announcement might have daunted investors in the REIT space. However, ushering in good news for investors, particularly the income seeking ones, recently a number of REITs have declared their dividend hikes. Among them are Saul Centers, Inc. BFS and Mid-America Apartment Communities, Inc. MAA, which announced an 8.5% and 6% hike in their dividend payouts, respectively.

Specifically, Saul Centers will now pay a dividend of 51 cents against the 47 cents paid in the prior quarter. Based on the increased rate, the annual dividend comes to $2.04 a share, resulting in an annualized yield of about 3.0%, considering Saul Centers’ closing price of $67.02 on Dec 12. The raised dividend will be paid on Jan 31, 2017 to shareholders of record as on Jan 17.

On the other hand, Mid-America Apartment Communities’ board has cleared a 6% hike to its common dividend for fiscal 2017. The company’s annualized dividend payout would now reach $3.48 per share of common stock, denoting an increase of 20 cents from the prior payout.

Also, the annualized yield comes to 3.7% based on Mid-America’s closing price of $94.76 on Dec 12. This represents its seventh straight annual increase of its common dividend and highlights the company’s consistent efforts to improve shareholders’ wealth.

Notably, solid dividend payouts remain arguably the biggest enticement for REIT investors as the internal revenue service (IRS) requires these companies to distribute at least 90% of their taxable income to shareholders, annually, in the form of dividends.

Besides Saul Centers and Mid-America, other REITs have also come out with dividend increase announcements. Notable among them are Ventas, Inc. VTR and SL Green Realty Corp. SLG.

Ventas’ new dividend of 77.5 cents per share marks an increase of 6% from that of its earlier payment. It will be paid in cash on Dec 30, 2016 to stockholders on record as of Dec 20. This leads to a dividend yield of around 5%, based on its price of $62.46 on Dec 9.

Moreover, earlier in December, SL Green announced its fourth-quarter 2016 common stock dividend of 77.5 cents per share, marking a sequential increase of 7.6%. This takes the annual dividend payment to $3.10 per share and marks the sixth consecutive year of dividend hike. The company will pay the new dividend on Jan 17, 2017 to shareholders on record as of Jan 3.

Currently, Mid-America, Ventas and SL Green carry a Zacks Rank #3 (Hold). However, Saul Centers has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Year to date, shares of Saul Centers have logged in a return of 30.7% against the Zacks categorized REIT – Equity Trust – Retail industry’s gain of just 0.9%. Mid-America shares ascended 4.4% compared to the REIT – Equity Trust – Residential industry’s decline of 7.2% over this time frame.

Shares of Ventas, too, have outperformed the Zacks categorized REIT – Equity Trust – Other industry over this time period. Ventas’ shares appreciated 11.8% against 4.2% increase of the industry. However, SL Green’s shares have declined around 0.1% against a 4.2% hike of the industry.

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SAUL CENTERS (BFS): Free Stock Analysis Report
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