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REITs May Continue to Face Pressure

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Image: The Dividend Cushion ratio is one of the most powerful financial tools an income or dividend growth investor can use in conjunction with qualitative dividend analysis. The ratio is one-of-a-kind in that it is both free-cash-flow based and forward looking. Since its creation in 2012, the Dividend Cushion ratio has forewarned readers of approximately 50 dividend cuts. We estimate its efficacy at ~90%. By Brian Nelson, CFA Times are tough for equity REITs (VNQ) and mortgage REITs (REM), with the VNQ and REM down 25% and 30%, respectively, so far in 2022. This is against a backdrop of Valuentum’s simulated Dividend Growth Newsletter portfolio and High Yield Dividend Newsletter portfolio that are doing far better. The lesson in 2022, … Read more

High-Yielding Digital Realty Is Committed to Rewarding Income Seeking Investors

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Image Shown: Digital Realty Trust Inc continues to secure new leases which supports its growth outlook. Image Source: Digital Realty Trust Inc – Second Quarter of 2022 Earnings Press Release By Callum Turcan Data center real estate investment trusts (‘REITs’) are a great source of income with ample growth opportunities given the secular tailwinds underpinning data demand growth. The proliferation of cloud computing, the Internet of Things (‘IoT’) trend, the rise of autonomous automobiles, households that previously did not have access to the Internet gaining access (particularly in sub-Saharan Africa and South Asian), the rollout of 5G wireless services, and other factors are all driving up data demand around the world. In turn, that makes it easier for data center … Read more

Dividend Increases/Decreases for the Week of July 15

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Below we provide a list of firms that raised their dividends during the week ending July 15. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week                Alta Equipment (ALTG): now $0.057 per share quarterly dividend. Bank of New York Mellon (BK): now $0.37 per share quarterly dividend, was $0.34. Bassett Furniture (BSET): now $0.16 per share quarterly dividend, was $0.14. Clorox (CLX): now $1.18 per share quarterly dividend, was $1.16. Cummins (CMI): now $1.57 per share quarterly dividend, was $1.45. Duke Energy (DUK): now $1.005 per share quarterly dividend, was $0.985. … Read more

ICYMI: Dividend Growth Idea Realty Income Completes Transformation, Further Expands Overseas

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This article originally appeared on our website November 17, 2021. Image Shown: An overview of dividend growth idea Realty Income Corporation’s tenant base, though this appears to be before taking into account its recent merger with VEREIT and spinoff of its corporate office properties portfolio. Image Source: Realty Income Corporation – November 2021 IR Presentation By Callum Turcan On November 1, Realty Income Corporation (O) completed its stock-for-stock merger with VEREIT, a deal that according to an April 2021 press release had an enterprise value of ~$50 billion. When the merger closed, shareholders of Realty Income owned ~70% of the new entity and shareholders of VEREIT owned the remainder. Realty Income is a real estate investment trust (‘REIT’) with a … Read more

Digital Realty Boosts Guidance and Further Extends Growth Runway

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Image Source: Digital Realty Trust Inc – Third Quarter of 2021 IR Earnings Presentation By Callum Turcan On October 26, Digital Realty Trust Inc (DLR) posted third quarter 2021 earnings that beat both consensus top- and bottom-line estimates. The data center real estate investment trust (‘REIT’) saw its GAAP operating revenues come in at $1.1 billion (up 11% year-over-year) and its non-GAAP core funds from operations (‘FFO’) per share come in at $1.65 per share (up 7% year-over-year) last quarter. Digital Realty also increased its guidance in conjunction with its latest earnings report, which we appreciate, as that signals the REIT is growing confident that it will exit 2021 on a high note. Digital Realty’s business is steadily recovering after … Read more

Dividend Growth Idea Realty Income Is on the Rebound

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Image Source: Realty Income Corporation – August 2021 IR Presentation By Callum Turcan Realty Income Corporation (O) is a real estate investment trust (‘REIT’) that is steadily recovering from the worst of the coronavirus (‘COVID-19’) pandemic. For reference, Realty Income focuses on freestanding singe-tenant commercial properties in the US and the UK. The financial health of the portions of its tenant base that were hit particularly hard by the pandemic, such as movie theater operators, has improved considerably of late. Back during the second quarter of 2020, Realty Income collected 86.5% of its contractually owed rent across its entire portfolio as many of its movie theater and health & fitness tenants, and to a lesser extent its causal dinning tenants, … Read more

Dividend Increases/Decreases for the Week July 16

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Below we provide a list of firms that raised their dividends during the week ending July 16. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Agree Realty (ADC): now $0.217 per share monthly dividend, was $0.200. Ally Financial (ALLY): now $0.25 per share quarterly dividend, was $0.19. American Financial (AFG): now $2.00 per share special dividend, was $0.50. Bank of America Corporation Deposit Shs Perp Pfd Shs Series E (BAC.PE): now $0.2556 per share quarterly dividend, was $0.2472. Bank of New York Mellon (BK): now $0.34 per share quarterly dividend, was … Read more

Realty Income’s Dividend Track Record Unfazed by Its Weakened Theater Exposure

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Image Source: Realty Income By Brian Nelson, CFA On Monday, February 22, Realty Income (O) reported solid fourth quarter results that beat expectations. For the quarter ending December 31, 2020, net income per share came in at $0.33, adjusted funds from operations per share was $0.84, and the REIT collected 93.6% of contractual rent, a decent percentage given that the troubled theater industry comprises ~5.6% of its annualized contractual rent. Regal Cinemas and AMC Entertainment (AMC) are top-10 customers. Though Realty Income continues to face headwinds from its non-investment grade client tenant portfolio, the REIT continues to invest for the future, with over $1 billion allocated to properties and properties under development or expansion in the period. As with many … Read more

Walking Through the Calculation of the Dividend Cushion Ratio

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A cow for her milk, A hen for her eggs, And a stock, by heck, For her dividends. An orchard for fruit, Bees for their honey, And stocks, besides, For their dividends. – John Burr Williams, “The Theory of Investment Value” (1938) Executive Summary: We believe the Dividend Cushion ratio is one of the most helpful tools an income or dividend growth investor can use in conjunction with qualitative dividend analysis. The ratio is one-of-a-kind in that it is both free-cash-flow based, considers balance sheet health, and is forward looking. Since its development in 2012, we estimate its efficacy at ~90% in helping to forewarn readers of impending dividend cuts. For companies where Valuentum reports are available, the Dividend Cushion ratio can be found in a stock’s Dividend … Read more

ICYMI — Dividend Growth Strategies Struggle

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Image: A large cap growth ETF (orange) has significantly outperformed an ETF tied to a dividend growth strategy, the SPDR S&P Dividend ETF (SDY), which mirrors the total return performance of the S&P High Yield Dividend Aristocrats Index. — By Brian Nelson, CFA — To no surprise to many members, several dividend growth strategies have faced tremendous pressure during 2020. The Journal recently wrote a piece on the topic, but from our perspective, the problem with many dividend growth strategies is that they tend to be balance-sheet agnostic and pay little attention to traditional free cash flow expectations, focusing only on the yield itself, sometimes dismissing future fundamentals in favor of historical growth trends and the inferior EPS-based dividend payout ratio. — In many dividend-targeted … Read more