3 REITs With The Largest Recent Dividend Hikes

If you’re a serious real estate investment trust (REIT) investor, dividend hikes are like music to your ears. If you already own the stocks that are announcing increases, you’ll receive more money each month or quarter and have the satisfaction of knowing that your annual yield, based on your purchase price, is also rising.

But even if you don’t own the REIT that announces a dividend hike, there are two reasons that it may be compelling to invest in it. First, it shows the company feels its funds from operations (FFO) is strong enough to cover the increase. Second, dividend hikes often propel shares higher over the next quarter.

Here’s a look at three REITs with some of the largest recent dividend hikes that may be worth your consideration:

The Macerich Co. (NYSE: MAC) is a Santa Monica, California-based retail REIT that specializes in the acquisition, leasing and management of 48 million square feet in 44 regional town center malls across the U.S.

The 52-week price range is $7.40 to $19.29. At the end of October, Macerich announced a quarterly dividend increase from $0.15 to $0.17, a 13.33% hike. Since then, Macerich shares are up about 17%.

“Our decision to increase our dividend is reflective of our resilient business model and strong operating cash flow position,” Macerich CEO Tom O’Hern said of the dividend increase.

The forward annual dividend of $0.68 currently yields 5.3%. Macerich cut its dividend drastically in early 2020 during the worst of the COVID-19 pandemic but has paid a consistent quarterly dividend since then. The funds from operation (FFO) of $1.93 provide a very conservative payout ratio of only 35%, so there is plenty of room for additional dividend growth in the future.

Kite Realty Group Trust (NYSE: KRG) is an Indianapolis-based retail REIT with open-air and mixed-use properties from Vermont to California. Its strip malls are mostly anchored by grocery stores. Other tenants include CVS Health Corp. (NYSE: CVS), The Fresh Market, Best Buy Co. Inc. (NYSE: BBY), Burlington, Ross Stores Inc. and Costco Wholesale (NASDAQ: COST).

On Nov. 9, Kite Realty Group Trust announced a hike in its quarterly dividend from $0.22 to $0.24 per share, an increase of 9.09%. Kite Realty Group has increased its dividend eight times since July 2020 after COVID-19 forced a cut from $0.318 to $0.052 per share.

Kite Realty Group has a forward FFO of $1.89. Its payout ratio of 50.7% is well within the range of safety, and it’s not difficult to imagine it eventually returning the dividend to the pre-COVID 19 levels. At a recent closing price of $22.07, it presently yields 4.3%. The 52-week range is $16.42 to $23.35.

Apple Hospitality REIT Inc. (NYSE: APLE) is a Richmond, Virginia-based hotel REIT that owns and operates 220 hotels in 87 markets in 37 states. The portfolio includes 96 Marriotts, 119 Hiltons, four Hyatts and one independent hotel.

Apple Hospitality REIT pays a monthly dividend, and in late October, the board of directors authorized an increase to its dividend from $0.07 to $0.08 per share. The new annual dividend of $0.96 per share yields about 5.7%.

The 52-week range for the stock is $13.79 to $18.69. The stock was recently near $16.75 and has moved up about 21% since the dividend increase was announced.

Apple Hospitality REIT’s second-quarter results were excellent, increasing its net income by 222% over the second quarter of 2021. FFO of $0.48 was more than ample to cover three months of dividend payments totaling $0.24, giving it a 50% payout ratio. Another dividend hike in 2023 is possible.

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