As of today Dividend.com is adding another REIT to its Best Dividend Stocks List. This REIT owns a whopping 28 million square feet of rentable space and since this company’s spin-off in the 1990s it has increased its quarterly payout by 200%.
Their portfolio spreads across California, Texas, Virginia, Maryland, Florida and Washington. The U.S. Government is their largest tenant followed by other behemoths like Lockheed Martin, Raytheon etc. However their largest tenant by sector is business services followed by software services.
They have the lowest leverage out of all the players in their industry. They are primarily funded by common stock, followed by preferred equity.
Their weighted average occupancy rate was more than 94% in 2015. With a P/FFO ratio of 20.25 based on 2016 earnings, this stock straddles between income and growth. Most importantly they didn’t cut their dividend in either of the last two recessions.
In a rising interest rate environment REITs have historically done well. Between June of 2003 and June of 2006, interest rates rose from 1% to 5.25%. During that time, the Dow Jones U.S. Select REIT Index managed to return 27.68% annually and provided a whopping total return of over 108%.
Since 1980, REITs have managed to return an average of 16% over the next 12 months during the 21 periods of rising interest rates. This combination of price appreciation and rising dividends has managed to crush the Barclays Capital U.S. Aggregate Bond Index.
To summarize here are 4 reasons why this stock enters the best dividend stocks list:
- Diverse tenant base across multiple industries.
- Very low leverage compared to industry peers.
- Rising interest rate environment has historically proven beneficial for REITs.
- They did not cut their dividend in either of the last two recessions.
Soft Removal from the Best Dividend Stocks List
A banking giant is being removed from the Best Dividend Stocks List that was added on 31st August 2012, that has so far given a total return of more than 20%. Though this $80 billion market cap company is being removed from the list, it continues to be rated at 3.5 which makes it a recommended stock. We believe that this stock which has a dividend paying history since 1970, will continue its stellar payout record given its strong 2017 EPS estimates. Its low exposure to oil and gas assets continue to serve it positively, which is reflected in its strong share price performance despite an oil and gas bloodbath.