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Equity Residential (EQR) Announces 5.1% Hike in Dividend


Equity Residential EQR has announced an increase in its first-quarter 2019 dividend. The company will now pay 56.75 cents per share, which reflects a hike of 5.1% from the prior dividend of 54 cents.

Based on the hiked rate of 56.75 cents for the quarter, the annual dividend comes to $2.27 per share. This new dividend will be paid on Apr 12, to shareholders of record on Mar 25, 2019. At this new rate, annualized yield comes at 3.02% based on the stock’s closing price of $75.06 on Mar 14.

The residential REIT also announced that its Annual Meeting of Shareholders will be held on Jun 27, in Chicago, IL.

The latest hike reflects Equity Residential’s ability to generate solid cash-flow growth through its operating platform and high quality portfolio. With a current cash flow growth rate of 8.80%, ahead of the industry’s average of 3.54%, the increased dividend is likely to be sustainable.

This January, the company reported fourth-quarter 2018 normalized funds from operations (FFO) per share of 84 cents, which came in higher than the 83 cents reported in the year-ago quarter. Results mirror improved same-store net operating income. However, casualty losses from its Washington, D.C. portfolio and transaction activity in recent years had a negative impact.

Notably, Equity Residential has been making concerted efforts to reposition its portfolio in high barrier-to-entry/core markets. It is anticipated to benefit from favorable demographics, lifestyle transformation and creation of new households. As such, we believe the company remains well poised to boost shareholders’ wealth.

However, new apartment supply across Equity Residential’s markets might continue to put pressure on new lease rates, occupancy, retention and result in high concessions as well.

Notably, solid dividend payouts remain arguably the biggest attraction for REIT investors as the U.S. law requires these companies to distribute 90% of the annual taxable income in the form of dividends to shareholders. Apart from Equity Residential, some other REITs which announced dividend hikes lately are American Tower Corporation AMT, Taubman Centers, Inc. TCO and Realty Income Corporation O.

American Tower Corp. recently rewarded its investors with 7.1% sequential hike in quarterly dividends on the company’s common shares. Specifically, the company hiked its dividend to 90 cents from the 84 cents paid earlier. The raised dividend is scheduled to be paid on Apr 26, to shareholders on record as of Apr 11, 2019.

Taubman Centers recently announced rewards for its shareholders in the form of a 3.1% sequential hike in the quarterly dividend rate on common stock. In fact, the quarterly dividend of 67.5 cents comes in higher than the previously-announced figure of 65.5 cents. The new dividend will be paid on Mar 29 to shareholders of record as of Mar 15, 2019.

Also, delighting its shareholders, Realty Income announced its 101st common stock monthly dividend hike since the company’s NYSE listing in 1994. The company will now pay 22.60 cents per share compared with the 22.55 cents paid earlier. The increased dividend will be paid on Apr 15 to shareholders on record as of Apr 1, 2019. The latest dividend rate marks an annualized amount of $2.712 per share versus the prior rate of $2.706 per share.

Equity Residential currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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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