Ushering in good news for its shareholders, The Macerich Company (MAC) announced a 4.8% hike in its quarterly dividend rate to 65 cents per share from 62 cents paid earlier. The new dividend will be paid on Dec 5, 2014 to shareholders of record as of Nov 12.
Based on this increased rate, the annualized dividend comes at $2.60 per share, resulting in an annualized yield of about 3.81% considering Macerich's closing price of $68.28 on Oct 23. Reflecting positive sentiment, the stock gained 0.95% in yesterday's regular session on the NYSE.
The dividend hike comes just a few days before this retail real estate investment trust (REIT) declares its third-quarter earnings results after the market close on Oct 28. Currently, the Zacks Consensus Estimate for the third-quarter funds from operations (FFO) stands at 89 cents per share.
Notably, leaving behind the property-cost woes tied to the cold winters in the first quarter, Macerich came up with better-than-expected results in the second quarter, delivering an earnings surprise of 2.38%, aided by occupancy gains. In fact, the company has reported earnings surprises in three of the last four quarters with an average earnings surprise of 0.59%.
As a matter of fact, solid dividend payouts are arguably the biggest attraction for REIT investors as the U.S. law requires these companies to distribute 90% of their annual taxable income in the form of dividends to shareholders.
Going forward, we believe that Macerich’s premium operating portfolio promises better growth prospects. Increasing mall tenant annual sales per square foot and re-leasing spreads offer solid scope for the company to ride on the growth trajectory and reward shareholders accordingly.
Macerich currently carries a Zacks Rank #2 (Buy). Investors interested in lodging REITs may consider better-ranked stocks like DDR Corp. (DDR), General Growth Properties, Inc (GGP) and Regency Centers Corporation (REG). All three stocks hold the same rank as Macerich.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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