Buy these stocks now, before they increase their dividends, to own shares before the rest of the market catches on to their higher payments. Not only will you immediately earn a higher yield, but the stock price should pop on the news as well.
With the start of a new year, it is natural to look for ideas to help your stock portfolio grow during the next 12 months. One bit of assistance I like to provide is to list those real estate investment trusts (REITs) that should announce higher dividend rates in the upcoming months. This knowledge can give you a jump on the rest of investing public, which will be surprised when the positive news is announced.
I maintain a database of about 130 REITs. With the spreadsheet, I track current yields, dividend growth rates, and dividend announcement dates. Most REITs announce a new dividend rate once a year and then pay that rate for the next four quarters.
Currently, about 90 REITs in my database have recent and ongoing histories of dividend growth. Out of that group, higher dividend announcements will happen during almost every month of the year. Despite the stock market gains since the election, the REIT sector is down for the last six months, off about 10% since early August. At the same time, actual earnings results have met or exceeded expectations, and funds from operations –the cash to pay dividends– has continued to grow.
Lower share prices mean that current yields are higher. On average, REIT yields are now about 0.8% higher than they were in early August. Higher dividend announcements can be the catalyst that start the price recoveries for individual REIT shares.
February is an active month for REITs to announce dividend increases. Many companies use their announcement of the previous year’s financial results as a good time to declare the dividend rate for the upcoming year. Here are five REITs that I expect to announce significant dividend increases next month.
First Industrial Realty Trust, Inc. (NYSE:FR) acquires, owns, and leases out industrial properties used by light industrial, warehouse, and R&D companies. The company has grown its dividend by 85% over the last two years, including a 49% increase last year.
For the first nine months of 2016, FFO per share was up 19%. Company guidance is in for a good fourth quarter, which should boost FFO for the full year to a 15% increase over 2015. First Industrial pays out about 50% of FFO as dividends.
Net income per share growth, which drives the minimum dividend paid, indicates another 25% dividend increase is probable. The new dividend rate is announced with the fourth quarter earnings report that comes out in the second half of February. Record date will be the end of March with a late April payment date. FR yields 2.7%.
QTS Realty Trust Inc (NYSE:QTS) is a mid-cap, $2.5 billion value, data center REIT that came to market with an October 2013 IPO. The company is growing rapidly, with adjusted FFO per share up 20% for the first nine months of last year.
A year earlier, per share prices cash flow increased by 24% year-over-year using third quarter results. In February 2016, the company announced a 12.5% dividend boost. The new dividend rate should be declared in late February with an early April payment and around March 20 record date. QTS yields 2.8%.
National Health Investors Inc. (NYSE: NHI) engages in the business of owning and financing healthcare properties. Its portfolio consists of real estate investments in independent living facilities, assisted living facilities, entrance-fee communities, senior living campuses, skilled nursing facilities, specialty hospitals and medical office buildings.
Last year, the company increased its dividend by 5.9%. Through the 2016 third quarter AFFO per share was up 5.5% compared to the same period in 2016. The company should announce another 5% to 6% dividend increase this year. The next dividend will be announced in mid-February with an end of March record date and payment in early May. NHI currently yields 4.7%.
Weingarten Realty Investors (NYSE:WRI) is engaged in the business of owning, managing, and developing retail shopping centers. Its 230 plus properties consist primarily of neighborhood and community shopping centers.
Last year, the company increased its quarterly dividend by 5.8%. For the first three quarters of 2016, core FFO per share was 6.8% higher than the same period in 2016. Another 6% dividend increase in 2016 seems probable. The next dividend will be announced in mid-February. Ex-dividend will occur in early March, with a mid-March payment date. WRI currently yields 4.0%.
Digital Realty Trust, Inc. (NYSE:DLR) is a large-cap data center REIT with a 10-year history of above average dividend growth. Last year, the dividend was increased by 3.5%, compared to the 10-year average annual 12.5% bump.
Growth in 2016 has improved and I expect a 5% to 8% dividend increase for 2017. The next dividend will be announced in mid-February, with a mid-March record date. Payment of the new dividend rate will start at the end of March. DLR currently yields 3.4%.
Stocks that have a high current yield and the potential for dividend growth are an integral part of my income investing strategy that I share in my newsletter, The Dividend Hunter. This is where I recommend the market’s strongest, most stable high-yield dividend payers, and there are 20 high-yield stocks currently available through my Monthly Dividend Paycheck Calendar system for generating a high monthly income stream from the market’s most stable high-yield stocks.