Mid-America Apartment Communities, also known as MAA, MAA recently announced that its board of directors has approved an increase in the company’s quarterly dividend payment. The company will now pay $1 per share, which reflects a hike of 4.2% from the prior dividend of 96 cents.
Based on the hiked rate of $1 for the quarter, the annual dividend comes to $4 per share. This new dividend will be paid on Jan 31, 2020, to shareholders of record on Jan 15, 2020. At this new rate, the annualized yield comes at 3% based on the stock’s closing price of $133.43 on Dec 10.
The move indicates this residential REIT’s commitment to reward shareholders through higher dividend payouts. In fact, it is the 10th consecutive annual increase in dividend. Further, the company has a good track record of paying dividends to its shareholders, and is one of the few apartment REITs which did not reduce or suspend dividend payments during the recession of 2008-09.
The latest hike reflects MAA’s ability to generate solid income through its operating platform and high-quality portfolio. In addition, with expected 2019 funds from operations per share growth of 7.8% ahead of the industry’s average of 5.1%, the increased dividend is likely to be sustainable.
Additionally, MAA enjoys a solid balance sheet with lower leverage and improved investment grade metrics. This provides significant financial strength to the company.
The company is also making efforts to enhance its portfolio on the back of multi-family property acquisitions and redevelopments. Furthermore, as part of capital-recycling efforts, the company has resorted to disposition of non-core assets and is using proceeds to fund development and redevelopment projects that will help generate accretive returns and boost earnings. Such prudent capital-management initiatives will further strengthen MAA’s balance sheet.
Over the past six months, shares of this Zacks #3 (Hold) company have gained 13.6%, outperforming the industry’s rally of 8.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, solid dividend payouts remain arguably the biggest attraction for REIT investors as the U.S. law requires these companies to distribute 90% of the annual taxable income in the form of dividends to shareholders. Apart from MAA, some other REITs which announced dividend hikes recently are SL Green Realty Corp. SLG, Alexandria Real Estate Equities ARE and Agree Realty Corporation ADC.
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