Terreno Realty Averages Double-Digit-Percentage Dividend Growth Rates Over Six Years (TRNO)
By: Ned Piplovic,
The Terreno Realty Corporation hiked its annual dividend payout at double-digit-percentage average rates for the last six consecutive years and currently offers its shareholders a 2.4% yield.
In addition to the rising dividend payouts over the past few years, the company rewarded its investors with asset appreciation that approached 30% over the past 12 months. The company’s next ex-dividend date is coming up shortly on December 28, 2017, and the next pay date for shareholders of record before then is scheduled on January 12, 2018.
Terreno Realty Corp. (NYSE:TRNO)
Founded in 2009 and based in San Francisco, California, the Terreno Realty Corporation operates as a publicly traded real estate investment trust (REIT). The company acquires, owns and operates industrial properties in the United States. Terreno Realty Corporation focuses its operations exclusively on industrial real estate in six major U.S. coastal markets: Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington, D.C. The Los Angeles and Northern New Jersey/New York City markets are the largest two markets and account for 45% of REITs total rentable space. The company concentrates its efforts on acquiring fully operational facilities or facilities that need just minor refurbishment. The REIT does not invest in greenfield ground-up facility development and does not make raw land investments. Because of this strategy, the REIT can avoid high leverage ratios and its current target debt level is no more than 40% of enterprise value. As of November 1, 2017, the company owned approximately 12.7 million square feet of rentable space, which was used by nearly 400 customers spread across 186 buildings.
The company’s current $0.22 quarterly dividend distribution is equivalent to a $0.88 annualized payout amount and currently yields 2.4%. This current quarterly dividend is 10% higher compared to the distribution from the same period of last year. Since beginning its dividend distributions in 2011, the REIT enhanced its annual dividend at an average rate of 14% per year. The total compounded growth of the annual dividend was 120% over the last six years.
In addition to the growing dividend income, the REIT’s rising share price contributed to shareholders’ total returns. The share price started its current trailing 12 months with a 7.8% drop from $28.75 on December 14, 2016, to its 52-week low of $26.52 on February 7, 2017. From there, the share price ascended 44.5% with minimal volatility and no significant dips towards its 52-week high of $38.32, which it reached on November 24, 2017.
After peaking in late November, the share price gave back approximately 4% of its gain and closed on December 12, 2017, at $36.76. This closing price was almost 28% higher than it was one year ago, 38.6% above its February 2017 low and 144% above the price from five years ago.
Terreno Realty focuses on total return to its shareholders and even designs executive compensation to support the goal of maximizing total returns. To align long-term compensation of its executives with stockholder’s total returns, executive bonuses are based solely on making sure that the three-year total stockholder return exceeds the MSCI U.S. REIT Index and the FTSE NAREIT Equity Industrial Index. The CEO and the president of the company have no annual cash bonus plan, no stock options, no dividend equivalent units and receive their entire long-term incentive compensation paid exclusively in stock.
With these incentives in place, Terreno Realty’s management team and associates, delivered to company’s shareholders a 31% total return over the last 12 months, a 96% total return over the trailing three-year period and a 167% total return over the last five 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.