5 REITs Increasing Dividends In April

After an ugly start to 2016, investors have become more interested in REITs. They are starting to realize that quality commercial real estate assets that generate attractive cash yields may be a stable place to invest as the more high-flying market sectors run into a global economic slowdown. The best REITs to own are those that provide regular dividend increases, growing your cash flow stream and pulling share prices higher.

Most REITs announce dividend increases once a year and in the same month each year. Across the sector, there are increase announcements in almost every month in the calendar. You can often get a nice share price gain by buying shares before a dividend increase announcement hits the news wires. I maintain a database that covers about 140 REITs. I use the database to track dividend rates, yields, and increases. Of the 140, about 95 have histories of regular dividend increases. There are five REITs that should announce a dividend increase in April.

ACC

American Campus Communities, Inc. (NYSE: ACC) owns, manages, and develops primarily off-campus student housing properties in the United States. The company owns about 160 properties with almost 100,000 beds. While some growth comes from acquisitions or development, ACC also realizes 2.5% per year of average rental rate growth. Since resuming dividend increases in 2013, the payout has been increased by about 6% for three consecutive years. In 2015, FFO per share was flat compared to 2014. However, the current dividend is just 68% of FFO, so a moderate increase is still likely for this year. The new dividend rate is announced at the end of April/early May with an end of May payment date. ACC currently yields 3.7%.

HPT

Hospitality Properties Trust (NYSE: HPT) owns 302 hotels and owns or leases 193 travel centers located throughout the United States, Canada, and Puerto Rico. All of the properties are leased to management operators. In 2015, FFO per share was up 1.5% over 2014. The current dividend rate is 60% of 2015’s FFO. For the last several years, HPT has been increasing the dividend by about 2% annually. The new dividend rate has been announced in mid-April, with a late April record date and second half of May payment date. HPT yields 7.7%.

lho

LaSalle Hotel Properties (NYSE: LHO) owns 47 hotels primarily located on the East and West coasts. The hotel industry and related REITs operate in a cyclical environment, and profits can rise rapidly when times are good and disappear when the economy dips into recession. Last year LaSalle increased its quarterly dividend by 20%. For 2015 FFO per share increased by 8.5%, so a more moderate increase is in the cards for this year. The current dividend rate is 63% of last year’s FFO number. LaSalle usually announces a dividend increase in the second half of April as the second quarter dividend to be paid in mid-July. The LHO share price should jump on the news of a dividend increase. The stock yields 6.8%.

SSS

Sovran Self Storage Inc (NYSE: SSS) owns over 500 self-storage facilities located in 26 states. Self-storage is a rapid growth REIT sector. Sovran has grown its dividend by an average of 12% per year for the last five years and increased it by 13% in 2015. For the year, FFO per share increased by 12.3% so investors should look for another double-digit dividend increase. The current dividend rate has been paid for just three quarters, but Sovran has averaged an increase every three quarters: sometimes two, sometimes three and sometimes four. If a boost is coming in April it will be announced near the start of the month for the dividend to be paid at the end of April. If we don’t get an increase next month, the SSS dividend will surely be increased in July. The stock yields 3.1%.

SKT

Tanger Factory Outlet Centers Inc. (NYSE: SKTwas the pioneer in developing factory outlet malls. The company has increased its dividend every year since its 1993 IPO. Over the last five years, the payout has grown at an 11% annual compounded rate, including an 18.8% increase last year. A minimum of a 10% boost should be announced this year. The next dividend will be announced in early April with an end of April payment date. SKT currently yields 3.4%.

Buying REIT shares in the month before a new higher dividend rate is announced is a great strategy to add some extra return to your income stock portfolio. Most of the investing world gets excited when a new, higher dividend is announced and then the share price moves up. Beat the crowd and buy your favorites in this group well before the announcement date.

Finding stable companies that regularly increase their dividends is the strategy that I use myself to produce superior results, no matter if the market moves up or down in the shorter term. The combination of a high yield and regular dividend growth is what has given me the most consistent gains out of any strategy that I have tried over my decades-long investing career.

Disclosure: There are currently over twenty of these stocks to choose from in my  more

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