Ushering in good news for its shareholders, DDR Corp. (DDR) announced an 11% hike in its quarterly dividend rate to 17.25 cents per share from 15.5 cents paid earlier. The new dividend will be paid on Apr 7, 2015 to shareholders of record as of Mar 12.
Based on this increased rate, the annualized dividend comes at 69 cents per share, resulting in an annualized yield of about 3.73% considering DDR's closing price of $18.52 on Jan 5.
DDR has been consistent in enhancing its shareholder’s wealth with dividend payouts. In fact, this current increase reflects the company’s 5th straight year of greater than 10% dividend growth.
We believe that DDR has adequate capacity to support its dividend policy. The company exited third-quarter 2014 with $134.3 million of cash. The company’s third-quarter 2014 operating FFO per share of 29 cents was in line with the Zacks Consensus Estimate and a cent above the prior-year quarter figure. Notable leasing momentum, same-store net operating income (“NOI”) and portfolio strengthening activities aided the results.
Going forward, we believe that DDR’s efforts toward portfolio-repositioning and capital-recycling would help it ride on the growth trajectory and reward shareholders accordingly. The company’s low pay put ratio is also suggestive of solid reinvestment in its growth needs, which, in turn, augur well for dividend hike in future. As a matter of fact, solid dividend payouts are arguably the biggest attraction for REIT investors.
DDR currently carries a Zacks Rank #4 (Sell). Investors interested in the retail REITs may consider better-ranked stocks like Kimco Realty Corp. (KIM), The Macerich Company (MAC) and Regency Centers Corp. (REG). All these stocks have a Zacks Rank #2 (Buy).
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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