CubeSmart CUBE announced a 31% hike in its quarterly dividend rate to 21 cents from 16 cents paid earlier. The company will pay the increased dividend on Jan 15, 2016 to shareholders of record as on Jan 4.
Based on the increased rate, the annual dividend comes to 84 cents a share, resulting in an annualized yield of about 2.9%, considering CubeSmart's closing price of $29.20 on Dec 10.
According to the company’s Chief Executive Officer, its operating platform and implementation of business plans led to solid cash flow growth and thus, the dividend hike. He pointed out that the company has raised its dividend “more than 60% over the last two years while continuing to maintain a conservative payout ratio”.
After reporting a positive earnings surprise of 6.25% in the last quarter with an expected earnings growth rate of 7.5% for the next five years, this real estate investment trust (REIT) is now poised to capitalize on promising prospects of the industry and benefit shareholders accordingly.
Solid dividend payouts are arguably the biggest enticement for REIT investors. Apart from Cubesmart, a number of REITs have announced dividend hikes in the recent times.
Such stocks include Acadia Realty Trust AKR, DCT Industrial Trust Inc. DCT and Kimco Realty Corporation KIM. Acadia Realty announced a 4.2% increase in its quarterly dividend rate to 25 cents, DCT hiked its dividend by 3.6% sequentially to 29 cents and Kimco raised the same by 6.3% to 25.5 cents.
Should You Buy?
CubeSmart has also been seeing solid estimate revisions over the past few months, suggesting increasing optimism on the firm’s prospects in both the short and long term.
In fact, over the past 2 months, current quarter estimates have risen from 31 cents per share to 32 cents, while current year estimates have risen from $1.21 a share to $1.23. This has helped CUBE to earn a Zacks Rank #2 (Buy), further highlighting the company’s solid position.
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