Dividend Hike at Post Properties

Zacks

Post Properties Inc. (PPS) announced a 32% hike in its quarterly cash dividend rate, reflecting decent growth and profitability. The company will now pay a dividend of 33 cents per share, up from 25 cents paid in the prior quarter. The increased dividend will be paid on Jul 15, 2013 to stockholders of record on Jun 28.

The announced quarterly dividend rate at this real estate investment trust (REIT) equates to an annualized rate of common stock dividend of $1.32 per share, resulting in a yield of over 2.6% based on the closing price of Post Properties' stock on May 24.

As a matter of fact, Post Properties has a strong balance sheet, which provides it with the financial flexibility to pursue accretive acquisitions and dividend payouts. This augurs well for its long-term growth.

As of Apr 26, 2013, the company had cash and cash equivalents of $113.4 million and no outstanding borrowings, and letters of credit totaling $0.6 million under its combined $330 million unsecured lines of credit. Notably, the company has no principal debt maturities in either 2013 or 2014.

Moreover, last month, Post Properties came up with impressive first-quarter results. The company reported funds from operations (FFO) of 74 cents per share, beating the Zacks Consensus Estimate by 5.7% and the year-ago quarter FFO per share by 15.6%.

Results reflect the ongoing momentum in apartment market fundamentals, the company’s solid capital position and attractive return potential of its new projects in development. Hence, with strong quarterly results, the company is well poised to maintain its growth curves and simultaneously benefit the shareholders with steadily rising dividends.

In addition to Post Properties, recently Plum Creek Timber Company Inc. (PCL) announced a 5% hike in its quarterly cash dividend rate to 44 cents per share, based on its bullish expectations of persistent growth of long-term, sustainable cash flow.

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.

Post Properties currently carries a Zacks Rank #3 (Hold). However, two other REIT stocks that are performing well and deserve a look includes Select Income REIT (SIR) that carries a Zacks Rank #1 (Strong Buy) and The Macerich Company (MAC), which has a Zacks Rank #2 (Buy).

Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.

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