These Stocks Are Expected to Raise Dividends with February Earnings Reports

Accelerating Dividends, Dividend Growth, Dividend Increase

The stock market is an interesting world. Stocks trade every business day. Analysts and financial writers publish numerous opinion pieces every day. For popular stocks, you can find new things to read every day. Even less popular companies are reviewed and rated several times a month.

Conversely, publicly-traded corporations typically release “real news” financial information just once a quarter. Just four times a year do we investors learn how much revenue a company generated and how much of that revenue dropped to become bottom line profits.

For dividend-focused investors, quarterly results are the fuel that drives investment decisions. All the opinion pieces and “analysis” over the rest of the quarter is mostly useless noise. When one of the dividend-paying companies I follow reports earnings, I dig into the financial results.

First off, I want to see enough free cash flow to cover the dividend payments. Then I review to see the direction of results on revenue and cash flow. Are they growing or declining? Finally, there is management commentary regarding the forecast of the business for the next few quarters.

After earnings, it is another three-month wait until the next release of real news from most companies. With the daily onslaught of from the financial news media, it can be mentally hard to grasp the information that matters for individual stocks as it is only released those four times a year. It takes patience to stick with income stocks through the ups and downs of the stock market that occurs every day during the months and weeks between earnings release dates.

To subscribers, I highly recommend tracking quarterly dividend income, so results can be compared from quarter to quarter. Right now, a few weeks into Q1, I find myself impatient as I log dividends as I’m eager to get to the end of the quarter so I can see how much my dividend income stream increased.

In February, we will get the bulk of 2019 fourth quarter earnings reports. These will also include 2019 full-year results, and management teams will give their outlook and guidance for 2020. February is a big month for investors who care about earnings and dividends. It is also the time when dividend increases are announced. Here are five real estate investment trusts (REITs) that should announce dividend boosts next month.

First Industrial Realty Trust, Inc. (FR) acquires, owns, and leases out industrial properties used by light industrial, warehouse, and R&D companies. The company has grown its dividend by over 17% per year over the last five years.

Last year the payout was increased by a lower than the recent average of 5.75%. For the first nine months of 2019, FFO per share grew by 9%.

First Industrial pays out about 50% of FFO as dividends. Industrial properties are a hot commercial real estate sector, and First Industrial should be able to accelerate cash flow growth in 2020.

The low payout ratio allows the company to continue to grow the dividend. I expect an 8% to 10% increase this year.

The new dividend rate is announced with the fourth quarter earnings report that comes out in the second half of February.

The record date will be the end of March with a late April payment date. FR yields 2.1%.

QTS Realty Trust Inc (QTS) is a mid-cap –$3.2 billion value– data center REIT that came to market with an October 2013 IPO. The company is growing rapidly, but FFO per share growth lagged revenue growth.

In early 2018 the company restructured its business to focus on Hyperscale and Hybrid Colocation and exiting its Cloud and Managed Services offerings.

The strategic shift is expected to generate 20% annual EBITDA growth.

The QTS dividend increased by 7.3% in 2019. The next dividend rate should be declared in late February with an early April payment and around March 20 record date. QTS yields 3.2%.

National Health Investors Inc. (NHI) is engaged 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 5.0%. Through the 2019 third quarter, AFFO per share was up 1.3% compared to the same period in 2018.

The company should announce a 2% to 3% dividend increase this year, compared to about 5% for the last couple of years.

The next dividend will be announced in mid-February with an end of March record date and payment in early May. NHI currently yields 5.0%.

Digital Realty Trust, Inc. (DLR) is a large-cap data center REIT with a 14-year history of above average dividend growth.

Last year, the dividend was increased by 6.9%, compared to the 10-year average annual double-digit percentage bump.

Five-year dividend growth has averaged 5.4%, so the company is reaccelerating the rate of growth. Cash flow in 2019 has improved, and I expect a 7% to 9% dividend increase for 2020.

The next dividend will be announced in mid-February, with a mid-March record date.

The payment of the new dividend rate will start at the end of March. DLR currently yields 3.8%.

AvalonBay Communities Inc (AVB) business is the development, redevelopment, acquisition, ownership, and operation of multifamily (apartment) communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California.

The company is focused on the high-end of the apartment spectrum. AVB stopped growing dividends but did not cut them, from 2008 through 2011.

In recent years, the payout has grown by mid-single digits, including a 3.4% increase in 2019. FFO growth in 2019 points to another 3% to 4% increase this year.

AvalonBay announces a new dividend rate in early February, with an end of March record date and payment in April. The stock yields 2.8%.

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