Apartment Investment and Management Company
) - an apartment real estate investment trust (REIT) better known
as Aimco - announced an 8.3% hike in its quarterly dividend rate.
The company will now pay a dividend of 26 cents per share of
Class A Common Stock compared with 24 cents paid in the prior
quarter. The increased dividend will be paid on Feb 28, 2014 to
stockholders of record on Feb 14.
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Following this announcement on Jan 29, shares of Aimco moved up
nearly 2% to $27.83 during the regular trading session on the
NYSE. The new dividend rate results in an annualized yield of
3.7% based on the company's closing price of $27.83 on Jan 30.
The company had last hiked its dividend a year ago. Undoubtedly,
a steady dividend payout facilitates the long-term strategy of
Aimco to provide attractive risk-adjusted returns to its
The dividend hike reflects a decent performance and meticulous
execution of strategic plans at Aimco. It has solid portfolio of
quality apartment communities in key markets in the U.S.
Additionally, the rise in demand for apartment properties driven
by the 'echo boomers' - children of the baby boomer generation -
keeps us positive on the stock.
In December, Aimco disclosed the collection of $230 million
associated with the West Harlem property loan deal. This has
helped Aimco to significantly improve its balance sheet as it
utilized the proceeds to pay off its outstanding debt on the
revolving credit line. At the end of the third quarter of 2013,
Aimco had cash on hand of $183.3 million and available borrowing
capacity on its revolving credit facility of $255.6 million.
A number of REIT stocks have also raised their dividend in recent
times. Among them,
) announced a 3.8% hike in its quarterly cash dividend rate to
54.5 cents per share while
AvalonBay Communities, Inc.
) raised it by about 8.4% sequentially to $1.16 per share.
Cousins Properties Inc.
) hiked its quarterly cash dividend by 67% sequentially to 7.5
cents per share.
Solid dividend payouts are arguably the biggest attraction for
REIT investors as the U.S. law requires these companies to
distribute 90% of their annual taxable income in the form of
dividends to the shareholders.
Aimco is scheduled to release its fourth-quarter 2014 results
after the market close on Feb 6. The Zacks Consensus Estimate for
fourth-quarter 2014 funds from operations (FFO) is currently
pegged at 56 cents per share.
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, stands at 0.00%. This
along with the Zacks Rank #3 makes surprise prediction difficult.
FFO, a widely used metric to gauge the performance of REITs,
is obtained after adding depreciation and amortization and other
non-cash expenses to net income.