Dividend.com is adding a REIT to the Best Dividend Stocks List. This REIT owns more than 70,000 properties across America and has an incredibly high occupancy rate of more than 96%. FFO is projected to grow 5% in 2016 from 2015. This REIT now has made 89 consecutive dividend payments. The stock currently trades at 18.46 × 2016 P/FFO, in spite of having such a strong dividend paying record. This REIT has an ownership interest in more than 75,000 operating apartment homes in more than 250 communities in 15 states. They currently have $96 million of expansion projects underway.
4 economic and demographic conditions that will continue to help this REIT positively:
- US home ownership interest is at an all time low.
- An interest rate tightening environment means more Americans are leasing properties than purchasing them.
- Nearly 4 million people are turning 25 each year who have the highest probability to rent an apartment as they move to big cities to be part of the knowledge economy.
- Lifestyle changes mean that the average age at which a male got married rose from 26 in 1990 to approximately 29.5 as of today and is projected to grow upwards, while the average age at which a female to get married is also up from 24 in 1990 to approximately 27 as of today—and both figures are expected to go up. This keeps more people renting for longer periods.
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.
Soft Removal from the Best Dividend Stocks List
We had recommended a consumer good stock back on 24th August 2012 as a ‘best dividend stock’. This stock has given a return of 90% so far excluding the dividends. We continue to rate this stock at 3.6, however it doesn’t make our ‘Best’ list since we now have a higher rated stock taking it’s place.