Arbor Realty Trust Advances Quarterly Dividend 10% (ABR)
By: Ned Piplovic,
With share price growth of more than 20% over the last 12 months, a dividend yield of nearly 10% and six years of rising dividends, the Arbor Realty Trust, Inc. (NYSE:ABR) is an example of investment opportunities with balanced returns from rising dividend income and steady asset appreciation.
In addition to the share price growth over the past year and more than five years of rising dividend distributions, the Arbor Realty Trust has rewarded its shareholders with total returns of more than 22% over the past 12 months. The dividend ex-date for the trust is on March 7, 2018 and the pay date follows just two weeks later, on March 21, 2018.
Arbor Realty Trust, Inc. (NYSE:ABR)
Arbor Realty Trust (NYSE:ABR) is a real estate investment trust (REIT) that invests in real estate-related bridge and mezzanine loans, preferred equity notes, discounted mortgage notes and other real estate-related assets. The REIT’s objective is to maximize the difference between the yield on its investments and the cost of financing these investments to generate cash for distribution, to facilitate capital appreciation and to maximize total return to its stockholders. Founded in 2003, the company’s headquarters are in Uniondale, New York.
The REIT boosted its quarterly dividend distribution 10.5% from $0.19 in the previous quarter to the current $0.21 payout in the first quarter of 2018. However, since the company hiked its quarterly dividend amount twice in 2017, the current quarterly payout is 23.5% higher than the $0.17 amount from the same period last year. The current quarterly payout amount converts to an annualized payout of $0.84 and is equivalent to a 9.9% dividend yield. This yield is 20.4% higher than the trusts own 8.2% average yield over the past five years.
Since the trust’s core business is real estate-related loans, mortgage notes and other real estate-related assets, its dividend and share price took heavy losses between 2007 and 2009 during the financial crisis. The company cut its annual dividend a combined 20% in 2007 and 2008 before eliminating the dividend payouts in 2009. Following a three-year hiatus, the trust resumed paying its rising dividends in 2012 and has advanced its annual amount at an average rate of 19.7% per year. This level of annual growth tripled the annual dividend amount over the past six consecutive years. In addition to outperforming its own dividend performance, the trust’s current dividend yield is also outperforming the company’s industry peers. The trust’s current 9.9% yield is nearly 90% higher than the 5.2% average yield of the entire Financial sector, which is generally among the three highest average yields of any sector. Additionally, Arbor Realty Trust’s current yield is 115% above the 4.6% average yield of all companies and 30% above the 7.6% average yield of only dividend-paying companies in the Diversified Industrial REIT segment.
Just like the 2008 financial crisis had a significantly adverse effect on the trust’s dividend distributions, its was devastating to the company’s share price. Over a two-year period, the share price plummeted more than 92% from nearly $32 at the beginning of 2007 to $0.58 by February 2009. However, over the past nine years since early 2009, the share price multiplied more than 14-fold by rising with relatively minimal volatility at an average growth rate of 2.5% per month, which is equivalent to a 34.8% annual growth rate.
More recently, the share price began its most recent trailing 12-months from its 52-week low of $7.36 on February 24, 2017 and spiked nearly 20% to reach its 52-week high of $8.80 by May 8, 2017. However, after that brief spike, the share price gave back 60% of those gains in 7 trading days and fell to $7.93 by May 17, 2017. Subsequently, the share price continued rising at is pre-spike trend and ascended 10% to close on November 24, 2017 at $8.75 – less than 0.6% short of the 52-week high from May 2017. Since November 2017, the share price pulled back slightly and then dropped significantly to below $8.00 during the market selloff in the first week of February but has been rising since and closed on February 23, 2018 at $8.51. That closing price is just 3.3% below the 52-week high from the beginning of May 2017 and 15.6% higher than the 52-week low from one year 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.