Boston Properties, Inc. BXP , on Sep 18, announced rewards for shareholders in the form of a 18.75% sequential hike in the quarterly dividend rate. In fact, the new dividend of 95 cents, way above the previously-announced dividends of 80 cents, indicates a hike of more than 46% over the past three years.
The company will pay the raised dividend on Oct 31, to shareholders on record as of Sep 28, 2018. Further, based on the increased rate, the annual dividend comes to $3.8 per share, up from the prior annual rate of $3.2 per share, leading to an annualized yield of 3%, considering Boston Properties' closing price of $126.14 on Sep 18.
Can Boston Properties Maintain its Payout?
Boston Properties' ability to sustain the hiked dividends depends on its funds from operations (FFO) growth and payout ratio. The company's current payout ratio is 51%.
Additionally, the company depicts a robust FFO picture. In the past three to five years, the real estate investment trust (REIT) witnessed FFO growth of 5.49%. Also, its FFO is projected to grow at a rate of 117.41% for the current year. The Zacks Consensus Estimate for 2018 FFO per share is $6.37.
Notably, Boston Properties follows sound capital-allocation strategies, aiming to improve values for shareholders. It uses free resources from non-core dispositions for development and accretive acquisition of properties in core markets, rewarding shareholders through dividend payments.
Furthermore, leveraging on the lucrative pricing environment, the company has been pursuing active monetization of its assets. Since 2013, the company has executed dispositions aggregating $4.6 billion, simultaneously investing $1.6 billion in acquisitions. These activities are expected to benefit Boston Properties over the long run.
Moreover, the company has an impressive history of boosting shareholders' wealth through dividend payments. In fact, since 2011, the company's dividends have been increasing, and have registered a five-year average annual dividend yield of 3.6%. In December 2017, delighting its shareholders, Boston Properties announced a 6.7% hike in the company's quarterly cash dividend rate. Prior to this, the company had approved a 15.4% hike in December 2016. Hence, given the company's solid financial position, its dividend payout rate will likely be sustainable.
Management anticipates 2018 taxable income to reflect gains from completed and planned asset sales. Moreover, contribution from its non-same-property portfolio, mainly driven by development deliveries is anticipated to buoy earnings in the current year.
We believe planned investments, along with significant growth initiatives, will enable the company to duly achieve its long-term investment targets and in turn, improve its shareholders' value through such dividend hikes.
Such disbursements highlight the company's strong cash position and its commitment toward rewarding shareholders handsomely.
Lastly, as investors prefer an income-generating stock, solid dividend payouts are arguably the biggest enticement for REIT investors. Needless to say, investors are always on the lookout for companies with a track record of consistent and incremental dividend payments to put their money on.
Stock Performing Well
In the past 12 months, Boston Properties' shares have rallied 5.5% against the industry 's decline of 1.1%.
Zacks Rank & Key Picks
Boston Properties carries a Zacks Rank #3 (Hold), at present.
Some better-ranked stocks from the REIT space include VICI Properties VICI , Park Hotels and Resorts, Inc. PK and W.P. Carey Inc. WPC . All three stocks carry a Zacks Rank of 2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
VICI Properties' Zacks Consensus Estimate for 2018 FFO per share has been revised upward by a cent to $1.50 over the past 60 days. Its shares have gained 13.5% in the past six months.
Park Hotels and Resorts' FFO per share estimates for 2018 witnessed 2% upward revision to $2.93 in two months' time. Its shares have appreciated 25% over the past six months.
W.P.Carry's FFO per share estimates for the current year moved up marginally in the past 30 days to $5.14. The stock has rallied 5.8% in six months' time.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Boston Properties, Inc. (BXP): Free Stock Analysis Report W.P. Carey Inc. (WPC): Free Stock Analysis Report Park Hotels & Resorts Inc. (PK): Free Stock Analysis Report VICI Properties Inc. (VICI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research