CatchMark Timber Rewards Investors With 4.1% Dividend Yield (CTT)
By: Ned Piplovic,
CatchMark Timber Trust Inc. (NYSE:CTT) has boosted its annual dividend payout every year since converting its status from a non-traded Real Estate Investment Trust (REIT) to a publicly-traded REIT in December 2013 and currently offers its shareholders a 4.1% dividend yield.
In addition to the steady dividend growth and a dividend yield that outperforms industry averages, the trust’s share price advanced in excess of 10% over the last year. While the share price exhibits above average volatility and the annual dividend has been growing slowly, investors might consider this equity as a way to enjoy double-digit-percentage total returns while diversifying a portion of their portfolio away from popular sectors such as Finance and Technology.
To take advantage of the upcoming dividend distribution, investors will have to take a position in this stock prior to the company’s next ex-dividend date on May 30, 2018, and therefore ensure eligibility to receive the dividend payouts on the company’s June 15, 2018, pay date.
CatchMark Timber Trust Inc. (NYSE:CTT)
Headquartered in Norcross, Georgia, and founded in 2005 as the Wells Real Estate Investment Trust IV, Inc., the CatchMark Timber Trust, Inc. operates as a real estate investment trust (REIT) and focuses on the acquisition of timberland properties in the United States. As of October 2017, the REIT owned a total of more than 500,000 acres of timberland located in Alabama, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee and Texas. The company owns approximately 460,000 acres of timberland outright, about 10,000 acres through its 50% interest in the Dawsonville Bluffs, LLC joint venture and leases approximately 31,000 additional acres from third parties. The REIT changed its name in 2006 to CatchMark Timber Trust, Inc.
The company will distribute its current annual $0.54 dividend amount for 2018 in $0.135 quarterly installments, which is equivalent to a 4.1% dividend yield. This current 4.1% yield is almost 15% higher than the company’s own five-year yield average of 3.6%.
The REIT has hiked its annual dividend every year since it started paying dividends in 2013. Compared to the first-year annualized payout, the REIT enhanced its annual dividend amount 23%, which corresponds to an average growth rate of 5.3% per year.
In addition to tracking ahead of its own five-year average yield, the REIT’s current 4.1% dividend yield is more than 260% above the 1.14% simple average yield of the entire Industrial Goods sector. However, since the Industrial Goods sector contains a range of different industries, a comparison to peers in the Lumber & Wood Production market segment is more meaningful. CatchMark’s current 4.1% yield outperforms the segment’s 2.82% average yield for all companies by 47% and is even 3% higher than the average yield of only dividend-paying companies in the segment.
The REIT’s share price dropped nearly 4% at the onset of the trailing 12-month period and closed at its 52-week low of $11.03 on August 1, 2018. After bottoming out at the start of August 2017, the share price embarked on a five-month uptrend and closed above $13.00 at the end of January 2018. However, the overall market selloff at the beginning of February affected the stock and the share price dropped 7.7% in just one week.
After that pullback, the share price spiked to its 52-week high of $13.64 on March 12, 2018 but fell back to $12.27 just 10 days later. Since that drop, the share price recovered more than 55% of its losses and closed on May 16, 2018, at $13.02, which was just 4.5% short of the mid-March peak price. Nevertheless, this closing price was 13.7% higher than it was 12 months earlier and 18% above the 52-week low from the beginning of August 2017.
The 16.7% share price advance since August 18, 2017, accounts for more than 90% of the share price appreciation over the past 12 months. The share price’s 50-day moving average (MA) was on a 60-day declining trend since mid-June and was in danger of crossing below the 200-day MA in a bullish manner before it reversed trend in mid-August. However, since the August 18, 2017, the 50-day MA has been rising and is currently almost 10% above the 200-day MA, which is an indication that the share-price growth could continue, at least in the short term.
While the rising dividend income and the slowly ascending share price might not stand out individually. The combined benefit for Caremark’s shareholders was an 18% total return over the past year and a 21% total return over the past three years
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