Arbor Realty Trust Offers 8% Quarterly Dividend Hike (ABR)
By: Ned Piplovic,
The Arbor Realty Trust, Inc. (NYSE:ABR) offers investors a textbook opportunity of an investments with balanced returns from a rising dividend income and steady asset appreciation.
The share price rose nearly 43% over the past 12 months. Furthermore the current 8% quarterly dividend hike is the third payout boost in 2018 and sixth in the past two years. Additionally, the company’s current quarterly dividend hike ends the sixth consecutive year in which the company rewarded its shareholders with a dividend hike.
Even despite a 43% share price enhancement, the company managed to maintain a high dividend yield. The current 8.9% yield is higher than the company’s own five-year average yield, as well as higher than the average yield of its industry peers.
In addition to the share-price growth over the past year and six consecutive years of rising dividend distributions, the Arbor Realty Trust has rewarded its shareholders with total returns of more than 50% over the past 12 months and more than 100% over the past three years. The ex-date dividend will occur on November 14, 2018, and the pay date follows just two weeks later on November 30, 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 8% from $0.25 in the previous quarter to the current $0.27 payout in the last quarter of 2018. However, since the company hiked its quarterly dividend already twice in 2018, the current quarterly dividend payout is more than 42% higher than the $0.19 distribution amount from the same period last year. The $0.27 quarterly dividend payout converts to an annualized payout of $1.08, which is equivalent to an 8.9% dividend yield. While slightly lower than last year due to the rapid asset appreciation, this current yield is still nearly 10% higher than the trust’s 8.1% average yield over the past five years.
The company’s dividend and share price took heavy losses between 2007 and 2009 during the financial crisis because the trust’s core business – real estate-related loans, mortgage notes and other real estate-related assets – were impacted heavily by the bursting of the housing bubble. The company was forced reduce its annual dividend a total of 20% during 2007 and 2008. Still, the reduction was insufficient, and the Arbor Realty Trust eliminated its dividend payouts completely for 2009. The trust resumed its quarterly dividend distributions in the second quarter of 2012. Since reinstituting the dividend distributions in 2012, the REIT tripled its annual dividend payout amount, which is equivalent to an average growth rate of more then 20% per year.
In addition to outperforming its own five-year average yield by nearly 10 %, the trust’s current dividend yield also outperformed the 3.3% average yield of the entire Financial sector by almost 170%. Additionally, the REIT’s current yield is also nearly 85% above the 4.8% simple average yield of all the companies in the Diversified REITs industry segment and nearly 11% higher than the average yield of the segments only dividend-paying companies.
After crashing from above $34 to less than $0.60 during the 2008 financial crisis, the share price has been on a steady uptrend since March 2009. The share price pulled back 6.3% at the onset of the trailing 12-month period and reached its 52-week low of $7.97 on February 5, 2018. However, since bottoming out in early February 2018, the share price roared almost 54% higher before reaching the 52-week high of $12.26 on August 31, 2018.
After peaking at the end of August, the share price declined throughout most of September, but reversed direction at the end of the month and has been rising since then despite the market volatility in October. By November 5, 2018, the share price pulled back to within 1% of its August peak and closed at $12.14. This closing price on November 5, 2018 was 42.7% higher than it was one year earlier, 52% above the February low and 77% higher than it was five years ago.
The robust asset appreciation and dividend growth combined for a 56% total return over the past 12 months and a 130% total return over the past three years.
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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.