SL Green Realty Corp. SLG has announced a 20% hike in its quarterly dividend rate to 72 cents from 60 cents paid earlier. The company will pay the increased dividend on Jan 15, 2016 to shareholders of record as on Jan 4.
However, the news failed to impress investors and SL Green’s shares fell 2.34% on the NYSE during yesterday’s trading session on broader market concerns.
Based on the increased rate, the annual dividend comes to $2.88 per share, resulting in an annualized yield of about 2.45%, considering SL Green's closing price of $117.72 on Dec 2.
According to the company’s Chief Financial Officer, the dividend hike came on the back of “earnings growth”, which was in turn driven by prudent investments and operating strategies. Notably, this New York City-based reputed landlord last increased its dividend 20% in the fourth quarter of 2014.
Importantly, SL Green has been actively pursuing portfolio enhancement initiatives through investments in opportunistic assets, and debt and preferred equities. Further, we believe that the Eleven Madison Avenue buyout is a strategic fit as this property is well-leased for the long term and positioned in one strongest commercial office submarkets in the city, offering the company ample growth prospects.
Moreover, having reported a positive earnings surprise of 8.92% in the last quarter with an expected earnings growth rate of 6.3% for the next five years, this real estate investment trust (REIT) remains well 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 SL Green, a number of REITs have announced dividend hikes in 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.
SL Green currently has a Zacks Rank #2 (Buy).
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