Delighting its shareholders, Essex Property Trust Inc. (ESS) declared a 10.8% hike in its quarterly dividend rate to $1.44 cents from $1.30 paid earlier. The new dividend will be paid on Apr 15, 2015 to shareholders of record as on Mar 31.
Based on this increased rate, the annualized dividend comes at $5.76 per share, marking 56 cents per share annualized increase. This results in an annualized yield of about 2.6% considering Essex Property's closing price of $222.38 on Feb 25. As a result, shares of Essex Property edged up 0.49% to $223.47 in the after-hours trading on the NYSE yesterday.
Essex Property has been consistent in enhancing its shareholder’s wealth with dividend payouts. In fact, the latest dividend hike marks the residential real estate investment trust’s (“REIT”) 21st consecutive annual dividend increase.
We believe that Essex Property holds adequate capacity to support its dividend policy. Riding on strong growth, the residential real estate investment trust reported encouraging fourth-quarter 2014 results. Core funds from operations (“FFO”) of $2.24 per share beat both the Zacks Consensus Estimate of $2.22 and the year-ago quarter figure of $1.94.
Essex Property exited fourth-quarter 2014 with cash and cash equivalents of $95.4 million, up from $53.8 million at the prior year-end. The company repaid a debt of $125 million outstanding on its $350 million term loan in Dec 2014. It also extended its $1.0 billion line of credit for an additional year with unchanged underlying interest rate (LIBOR plus 95 basis points), due for maturity in Dec 2018.
Going forward, we believe that with an enhanced property base and strong management team, Essex Property is well poised to leverage the attractive market fundamentals of the West Coast and reward its shareholders accordingly.
As a matter of fact, solid dividend payouts are arguably the biggest attraction for REIT investors. Besides Essex Property, Prologis Inc. (PLD), Avalonbay Communities Inc. (AVB) and HCP Inc. (HCP) also came up with dividend hike announcements of late.
While Prologis announced a 9% hike in its quarterly dividend rate to 36 cents, AvalonBay declared a 7.8% increase to $1.25 per share, and HCP made a hike of 3.7% to 56.5 cents.
Essex Property currently carries a Zacks Rank #3 (Hold).
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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