), a leading multifamily real estate investment trust (REIT), has
recently declared a quarterly dividend of 22 cents per share for
the third quarter of 2012. The dividend is payable in cash on
October 31, 2012, to shareholders of record as on October 10. The
current dividend payout will be the 160th consecutive quarterly
dividend paid by the company.
The proposed dividend represents a 10.0% year over year increase to
that paid in the year-ago quarter. If the current dividend level is
maintained for the remainder of the year, the annualized dividend
payout of the company would be $0.88 per share. This would equate
to a modest year-over-year dividend hike for UDR with a 10.0%
increase in dividend for the full year 2012.
UDR is among a select group of companies who have maintained an
uninterrupted dividend payout even during the recession, when most
companies had suspended the same. Based on the closing price of
$25.33, the current dividend yield is fairly decent, at
A steady dividend payout facilitates the long-term strategy of UDR
to provide attractive risk-adjusted returns to its stockholders.
The company has also historically promulgated a dividend
reinvestment and direct stock purchase plan through which
stockholders may purchase additional shares of the company by
reinvesting some or all of the cash dividends received on the
Investors looking for high dividend yields are increasingly
favoring REITs like UDR. Solid dividend payouts are arguably the
biggest enticement for REIT investors as the U.S. law requires
REITs to distribute 90% of their annual taxable income in the form
of dividends to shareholders.
UDR is among the best-positioned multifamily apartment REITs in the
U.S., with the majority of its portfolio located in California,
Florida and on the Atlantic Coast. These are areas where housing
costs have soared in the past few years, and despite the drop in
home values, the rent vs. ownership spread remains high. The
housing meltdown will continue to help apartment REITs like UDR and
we expect this sector to remain comparatively stable in the coming
quarters as well.
Furthermore, UDR has a geographic diversification that increases
investment opportunity and decreases the risk associated with
cyclical local real estate markets and economies, thereby
increasing the stability and predictability of the earnings. UDR
has also continuously upgraded the overall quality of its portfolio
by selling smaller market, older properties and replacing them with
newer assets in better long-term markets. This provides an upside
potential for the company.
We maintain our Neutral recommendation on UDR for the long term,
which currently has a Zacks #3 Rank that translates into a
short-term Hold rating. We also have a long-term Neutral
recommendation and a Zacks #3 Rank for
), one of the competitors of UDR.
EQUITY RESIDENT (EQR): Free Stock Analysis
UDR INC (UDR): Free Stock Analysis Report
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