High Dividend Stocks: Arbor Realty Trust, Inc. (NYSE:ABR)
By: Ned Piplovic,
With a current dividend yield that exceeds 9%, The Arbor Realty Trust, Inc. (NYSE:ABR) is the epitome of high dividend stocks.
The share price started with a robust gain after the initial public offering in 2004 and gained 75% in the first three years. However, the 2008 financial crisis had devastating effects on the Arbor Realty Trust’s share price. The share price lost more than 98% of its value in just two years during the crisis and dropped from more than $34 in February 2007 to less than $0.60 by March 2009. However, since reaching this all-time low, the share price has risen more than 20-fold, despite few additional pullbacks along the way.
The 2008 crisis impact on the company’s dividend income was equally damaging. Amid declining overall markets and a falling share price, Arbor Realty eliminated its dividend distribution at the beginning of 2009. However, with the recovering share price, the company reintroduced dividend payouts in the second quarter of 2012 and has continuously hiked it dividend payout every year since then. Since re-instituting the dividend distributions in 2012, the REIT tripled its annual dividend payout amount, which is equivalent to an average growth rate of more than 17% per year.
The share price experienced volatility and Arbor Realty Trust even suspended dividend distribution for a few years. However, the trust has been recovering constantly and its steady combined gains from asset appreciation and rising dividend income over the past seven years have delivered total gains like many other high dividend stocks.
Arbor Realty Trust, Inc. (NYSE:ABR)
Headquartered in Uniondale, New York, and founded in 2003, Arbor Realty Trust (NYSE:ABR) is a real estate investment trust (REIT) that invests a diversified portfolio of structured finance assets in the multifamily and commercial real estate markets. The trust operates primarily through two business segments — Structured Business and Agency Business. Arbor Realty primarily invests in real estate-related bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related notes and various mortgage-related securities. Additionally, the company offers bridge financing products to firms interested in using short-term capital for property acquisitions. Furthermore, the trust makes preferred equity investments in entities that directly or indirectly own real property, as well as junior participation financing in the form of a junior participating interest in the senior debt. In addition, the trust underwrites, originates sells and services multifamily mortgage loans. As long as the company distributes at least 90% of its taxable income to its stockholders, the Arbor Realty Trust generally would not be subject to federal corporate income taxes.
High Dividend Stocks: Arbor Realty Dividends
The REIT boosted its quarterly dividend distribution 3.7% from $0.27 in the previous quarter to the current $0.28 quarterly amount. Furthermore, the trust boosted its quarterly payout twice in late 2018. Therefore, the current $0.28 payout is 12% higher than the $0.25 amount from the same period last year.
This new $0.28 payout is equivalent to a $1.12 annual distribution and a 9% forward dividend yield. Additionally, the current yield is also 6.1% higher than the trust’s own 8.51% average yield over the past five years. In addition to outperforming its own five-year average, the trust’s current dividend yield also outperformed average yields of its industry peers.
Arbor Realty’s current 9% yield is triple the 2.97% simple average yield of the entire Financial sector, as well as more than 120% higher than the 4.07% yield average of the company’s peers in the Diversified REITs industry segment. Furthermore, Arbor Realty’s current yield is also 34% above the 6.74% average yield of the Diversified REITs industry segment’s only dividend-paying equities.
High Dividend Stocks: Arbor Realty Share Price
Riding the uptrend that began in early 2016, the share price gained more than 25% from the beginning of the trailing 12-month period to mid-November 2018. However, driven by the overall market correction in late 2018, the share price gave back all those gains and reached its 52-week low of $9.78 on December 24, 2018.
After bottoming out in late 2018, the share price rose more than 42% towards its 10-year high of $13.90 on April 24, 2019. The share price pulled back 10% to close on June 19 at $12.41. This closing price was 23% higher than one year earlier, 27% above the 52-week low from late December 2018 and 83% higher than it was five years ago.
Despite trouble on the stock and dividend side in the past, the company managed to stabilize its performance and deliver to its shareholders exemplary total returns over the past several years. Just over the past year, the 20% capital gains combined with one of the highest yields among high dividend stocks to offer shareholders a total return of nearly 33% over the trailing 12 months. The shareholders more than doubled their investment over the past three years with a total return of more than 120% over the past three years. Lastly, the total return over the past five years was nearly 130%.
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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.