DuPont Fabros Technology, Inc. DFT recently raised its quarterly cash dividend by 12% to 47 cents per share from 42 cents paid earlier. Based on yesterday’s closing price of $31.93 per share, the stock yields an attractive annualized dividend of 5.9%. Notably, the dividend will be paid on Jan 15, 2016, to shareholders of record as of Dec 30, 2015.
Given that DuPont Fabros’ dividend yield surpasses the industry average of 4.6%, the stock is likely to draw increasing investor attention. Moreover, considering the company’s strong performance during the first nine months of 2015, we believe the stock is poised for future earnings growth. Hence, the new dividend is anticipated to be sustainable.
Notably, the company’s same store net operating income grew 1.6% year over year during the first nine months of 2015, while normalized funds from operation (“FFO”) climbed 3.3% on a per share basis over the same period. Further, for full-year 2015, normalized FFO per share is expected to grow within 2.5−3.4%.
Additionally, at the recently held Investor Day conference on Nov 10, the company affirmed its target of 6−7% growth in dividends by 2020.
DuPont Fabros is a real estate investment trust (“REIT”) that owns, develops, operates and manages wholesale data centers. Presently, the company has 12 data centers, spanning 3 million square feet and totaling 266 megawatts of available critical load to power servers and computing equipment of its customers.
The company currently carries a Zacks Rank #2 (Buy).
Better-ranked stocks in the REITs industry include Arbor Realty Trust Inc. ABR, Empire State Realty Trust, Inc. ESRT and Mack-Cali Realty Corp. CLI. All three stocks sport a Zacks Rank #1 (Strong Buy).
Note: Funds from operations, 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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