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CoreSite Realty (COR) Hikes Quarterly Dividend by 12.5%

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Ushering in good news for shareholders, CoreSite Realty CorporationCOR recently announced a 12.5% hike in its quarterly cash dividend. The company will now pay a dividend of 90 cents per share for second-quarter 2017, up from 80 cents paid in the prior quarter. The raised dividend will be paid on Jul 17 to shareholders of record as on Jun 30, 2017.

Based on the increased rate, the annual dividend comes to $3.60 a share, resulting in an annualized yield of about 3.42%, considering CoreSite's closing price of $ 105.28 on May 31.

In fact, solid dividend payouts are arguably the biggest enticement for REIT investors, and Coresite's dividend per share has witnessed a compound annual growth rate (CAGR) of 25% since fourth-quarter 2013 through fourth-quarter 2016. This reflects the company's consistent efforts to improve shareholders' wealth.

Also, per the company's CEO, Paul Szurek, a semi-annual basis review of the dividend level helps the company "to more closely align the dividend with performance and return operating cash flow to shareholders" according to the company's policy.

Coresite has robust fundamentals to back dividend hikes. This data center real estate investment trust (REIT) has been chosen by over 1,000 of the world's leading enterprises, network operators, cloud providers, and supporting service providers for connecting, protecting and optimizing their performance-sensitive data, applications and computing workloads, per the company.

In fact, the company has been a decent performer, beating the Zacks Consensus Estimate in three of the past four trailing quarters on funds from operations (FFO) per share basis, with an average positive surprise of 4.04%. Coresite's ROE is 26.78%, higher than the industry's ROE of 13.05%. Further, the company has current cash flow growth of 28.23% against the industry average of 15.66%. This will likely help the company in sustaining its dividend payout to equity investors.

Notably, with growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure, data center REITs are experiencing a boom. In fact, demand is outpacing supply in top-tier data center markets and despite enjoying high occupancy, these are absorbing new construction at a faster pace. Also, data center REITs pulled in their capital and scored well on the return book through Apr 2017, registering total returns of 18.03%.

CoreSite Realty currently carries a Zacks Rank #3 (Hold).

Over the past three months, shares of CoreSite Realty outperformed the Zacks categorized REIT and Equity Trust - Other industry. During this time frame, shares of CoreSite Realty ascended 16.6%, whereas the industry remained nearly flat.

Stocks to Consider

Investors can also consider better-ranked stocks in the REIT space like PS Business Parks, Inc. PSB , Prologis, Inc. PLD and Sunstone Hotel Investors, Inc. SHO . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

PS Business Parks' estimates for 2017 FFO per share increased 3.6% to $6.09, over the past 30 days.

Prologis' estimates for 2017 FFO per share moved north nearly 3.8% to $2.76, over the past 60 days.

Sunstone Hotel currently has long-term growth rate of 5.0%.

Note: All EPS numbers presented in this write up represent funds from operations ("FFO") per share. 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.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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