2 Residential REITs Return 3% Yields and Offer Rising Dividends
By: Ned Piplovic,
Two residential real estate investment trusts (REITs) have been rewarding their investors with several years of rising dividends and currently pay dividend yields around 3%.
Additionally, the two REITs increased the value of their assets more than 7.5% over the past year and more than 50% over the last five years. During the past two decades, the two REITs combined cut their annual dividend payouts only three times and managed to pay rising dividends consistently before and after those dividend cuts.
Both equities will pay dividends in mid-July to all shareholders of record as of June 28, 2017.
AvalonBay Communities, Inc. (NYSE:AVB)
AvalonBay Communities, Inc., develops, owns and operates multifamily communities in the United States. The company owns or holds ownership interest in 284 apartment communities containing approximately 82,500 apartment homes in 10 states and the District of Columbia. Currently, 24 of these communities are under construction and nine communities are under reconstruction. These communities are located in the U.S. Northeast, Mid-Atlantic, Pacific Northwest, Northern California and Southern California. More specifically, the residential communities are in 18 high barrier-to-entry markets characterized by a low supply of zoned apartment land and lengthy entitlement processes. Founded in 1978, the REIT is based in Arlington, Virginia.
The current quarterly dividend of $1.42 is equivalent to a $5.68 annual payout and a 2.9% yield. Over the past six consecutive years, the REIT boosted its annual dividend every year by an average 8% per year. Even over the past two decades, the REIT managed to maintain a 5.3% annual dividend growth rate with only three years without a dividend boost.
The share price dropped almost 10% between late-June and mid-November 2016. However, since November 2016, the share price rose 26% to reach its 52-week high by June 5, 2017. The June 22, 2017 closing price of $194.55 is just 2.5% less than the 52-week peak price and 11% above the price from June 2016.
Camden Property Trust (NYSE: CPT)
Camden Property Trust owns and manages 153 multifamily residential apartment communities with more than 53,000 apartment units across nine U.S. states. The firm’s properties principally consist of mid-rise buildings and two-and three-story buildings with various amenities, such as swimming pools, a clubhouse, whirlpool spas, tennis courts and controlled-access gates. Founded in 1993, the REIT is headquartered in Houston, Texas.
The REIT currently pays a $0.75 quarterly dividend. This quarterly distribution is equivalent to a $3.00 annual payout and a 3.4% dividend yield. In September 2016, the company paid a $4.25 special dividend, which raised the total annual dividend for last year to $7.20. Because of that special dividend, the total annual dividend for 2017 is on track to be less than half last year’s amount.
However, if we disregard the special dividend, the company hiked its regular dividend for the past seven consecutive years. Over the past 20 years, the REIT cut its annual dividend only twice, in 2009 and again in 2010. However, since 2010, the annual dividend rose at a 7.6% average annual rate.
The share price dropped 7.5% from June to November 2016. Since reversing the downtrend in mid-November 2016, the share price rose more than 20% and reached a new 52-week high of $90.91 on June 19, 2017. As of closing on June 21, 2017, the share price was 7.5% above the June 2016 and 54% higher than it was five years ago.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.