Solid Attractive High Yield Plays
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by Tim Plaehn
July marks the start of the 2019 third quarter, and in a few weeks, earnings season starts, with a flood of quarterly earnings reports. With income stocks, quarterly earnings often are closely led or followed by dividend announcements.
Common stock dividends are note sure things until they are announced. It’s even better when a dividend announcement comes with a payout rate increase.
If you expect a dividend increase is coming soon, you can put the stock on your watch list to pick up shares during any price dip in the weeks leading up to the announcement date. Today I am giving you lead time warning on some projected dividend increases for next month.
Real estate investment trusts (REITs) pay attractive current yields and regularly increase their dividend rates. I maintain a database of about 140 REITs, out of which about 100 have histories of dividend growth.
Most of these companies increase the quarterly dividend once a year, and then pay the new rate for the next four quarters. Even though individual REITs increase their dividends just once a year, those announcements are spread across almost every month of the year.
To capture those share price gains, you want to buy shares a few weeks to a month before the next dividend increase announcement is published. Now in early July, it is a great time to look at those REITs that should increase dividends in August.
Here are a few REITs from my database that historically have boosted their payouts in August.
Federal Realty Investment Trust (FRT) is a $10 billion market cap REIT that owns, operates, and redevelops high quality retail real estate in the country’s best markets.
FRT has increased its dividend for over 50 consecutive years, the longest growth streak of any REIT. Over the last 5 years, the average annual dividend increase has been 6%. Last year the dividend was increased by 2.0%. Based on management guidance, an increase close to the 5% annual average is in the cards for this year.
The company announces its new dividend rate in early August. The ex-dividend date will be in mid-September with payment about a week later.
This is a very high-quality REIT. The stock yields 3.1%.
Eastgroup Properties Inc. (EGP) is a $4.3 billion market value REIT that focuses on development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States with an emphasis on the states of Florida, Texas, Arizona, California and North Carolina.
The industrial properties sector is currently one of the best performing real estate sectors.
The company has increased its dividend for 23 of the last 26 years, including the last seven in a row. Last year the payout was increased by 12%. This year my forecast is for a 5% to 7% increase.
The new dividend rate should be announced in late August or early September, with a mid-September ex-dividend date and end of the month payment date.
EGP yields 2.5%.
Healthcare Trust of America, Inc. (HTA) is a $5.7 billion REIT that acquires, owns and operates medical office buildings. The company reduced its dividend in 2012 and 2013, which was followed by small increases in each of the next four years.
Last year the dividend was bumped up by 1.7%; comparable to the increase of the previous year. In 2018, the funds available for distribution per share increased by 1.2%, and for the 2019 first quarter, FAD per share was flat compared to a year earlier.
Management has been very conservative with the dividend growth and I expect a small increase comparable to the last couple of years. Last year the new dividend rate was announced in early August, with an end of September ex-dividend date and early October payment date.
The stock currently yields 4.5%.
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Weyerhaeuser Company (WY) is a $20 billion market cap company that converted to REIT status in 2010. The company owns forest land and generates revenue by harvesting trees and processing the trees into lumber and pulpwood products.
Since the REIT conversion, the dividend has steadily increased, but not on a regular schedule. The current rate has been paid for four quarters, so an increase is due with the next announcement.
Last year the WY dividend increased by 6.3%. The next dividend announcement will be in late August with mid-September record date and end of September payment.
WY yields 5.1%.
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