Unraveling Equity Residential's Dividend Performance: A Comprehensive Analysis
Delving into Equity Residential's Dividend History, Yield, Growth, and Sustainability
Equity Residential (NYSE:EQR) recently announced a dividend of $0.66 per share, payable on 2023-10-13, with the ex-dividend date set for 2023-09-25. As investors anticipate this forthcoming payment, the focus shifts to the company's dividend history, yield, and growth rates. Using data from GuruFocus, this article will delve into Equity Residential's dividend performance and evaluate its sustainability.
Equity Residential: An Overview
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Equity Residential owns a portfolio of 304 apartment communities comprising around 80,000 units and is developing two additional properties with 537 units. The company's strategic focus is on owning large, high-quality properties in the urban and suburban submarkets of Southern California, San Francisco, Washington, D.C., New York, Seattle, and Boston.
Equity Residential's Dividend History
Since 1993, Equity Residential has maintained a consistent dividend payment record, currently distributed on a quarterly basis. The chart below provides a glimpse into the company's annual Dividends Per Share for tracking historical trends.
Equity Residential's Dividend Yield and Growth
As of today, Equity Residential has a 12-month trailing dividend yield of 4.28% and a 12-month forward dividend yield of 4.41%. This implies an anticipated increase in dividend payments over the next 12 months.
Over the past three years, Equity Residential's annual dividend growth rate was 3.30%. This rate increased to 4.30% per year over a five-year horizon, and over the past decade, Equity Residential's annual dividends per share growth rate stands at 3.20%.
Based on Equity Residential's dividend yield and five-year growth rate, the 5-year yield on cost of Equity Residential stock as of today is approximately 5.28%.
Is Equity Residential's Dividend Sustainable?
To evaluate the sustainability of the dividend, we must consider the company's payout ratio. The dividend payout ratio gives insights into the proportion of earnings the company distributes as dividends. As of 2023-06-30, Equity Residential's dividend payout ratio is 1.21, which may suggest that the company's dividend may not be sustainable.
Equity Residential's profitability rank of 7 out of 10 suggests good profitability prospects. The company has reported positive net income each year over the past decade, further solidifying its high profitability.
Equity Residential's Growth Metrics
Equity Residential's growth rank of 7 out of 10 implies a good growth trajectory relative to its competitors. However, the company's 3-year EPS growth rate of -7.30% per year on average underperforms approximately 67.42% of global competitors.
Furthermore, the company's 5-year EBITDA growth rate of 8.60% underperforms approximately 37.02% of global competitors, suggesting areas for improvement.
Conclusion
While Equity Residential's consistent dividend history and promising yield paint an attractive picture, the high payout ratio and underperformance in growth metrics raise questions about the sustainability of its dividends in the long run. Investors should consider these factors and keep a close eye on the company's financial health and future growth prospects. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
