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Investors are always excited to learn that a stock they own has announced a dividend increase. For income investors, this means a monthly or quarterly increase. However, for more growth-minded investors, dividend increases also show that the board is confident the company can grow future earnings and comfortably cover the dividend.
Additionally, an increase in dividends often makes the stock more attractive to investors, which can lead to share price appreciation.
Look at four real estate investment trusts (REITs) that announced dividend hikes this week. Two of the REITs have remarkable dividend growth records, while the other two have cut their dividends in recent years:
Innovative Industrial Properties Inc. (NYSE:IIPR) is a diversified, internally managed industrial REIT based in San Diego specializing in triple net leases and leasebacks of commercial properties with cannabis companies as the sole tenants. It also creates loans for cannabis operators who need financing. It was founded in 2016 and went public on December 1 of the same year. As of May 2024, Innovative Industrial owned and operated 108 properties totaling 8.9 million rentable square feet in 19 states, with a weighted average lease term (WALT) of 14.8 years.
Innovative stands will benefit from the recent proposal reclassification of cannabis from Schedule I to Schedule III, removing it from a classification that includes heroin, LSD and ketamine.
Recently, on June 10, Innovative Industrial announced that it purchased a 145,000 square foot industrial space in Ocala, Florida for $13 million and entered into a long-term triple net lease with a unit of AYR Wellness Inc. (OTC:AYRWF) for 98,000 square feet of space.
On June 14, Innovative Industrial Properties announced a 4.4% increase in its second quarter dividend, from $1.82 to $1.90. The dividend is payable on July 15 to shareholders of record at the close of business on June 28.
Over the past five years, Innovative Industrial has increased its quarterly dividend by 143%, from $0.78 per share, with no cuts or suspensions. The annual dividend of $7.60 per share yields 7.01%.
WP Carey Inc. (NYSE:WPC) is a New York-based diversified net lease REIT whose single-tenant properties include industrial, warehouse, retail and self-storage units. It was founded in 1973 and recently celebrated its 50th anniversary in real estate investing.
At the end of the first quarter of 2024, WP Carey had 1,282 net lease properties and 89 self-storage properties in 26 countries. Its net lease portfolio includes 335 tenants with a WALT of 14.9 years and an excellent occupancy rate of 99.1%. However, the occupancy rate for self-storage properties was only 90.4%.
One of WP Carey’s goals for 2024 was to acquire more properties and that’s what he did. On June 3, WP Carey announced that it had acquired three properties in Arizona. One was a newly constructed 300,000 square foot distribution center for $40 million; the other two were fitness centers with an existing tenant for $28 million.
So far in 2024, WP Carey has made investments and future commitments of approximately $700 million.
On June 13, WP Carey announced an increase in its quarterly dividend from $0.865 to $0.87 per share. The dividend is payable on July 15 to shareholders of record on June 28. WP Carey also increased its dividend in March, from $0.86 to $0.865 per share.
One caveat: Investors are still concerned after WP Carey cut its dividend by almost 20%, from $1.05 to $0.86 per share in December 2023, following a slight increase a few weeks prior. This reduction is due to the sale of part of its office portfolio and the split of the remaining offices into Net Lease Office Properties (NYSE:PNLOP).
Chimère Investment Corp. (NYSE:ICM) is a New York-based mortgage REIT (mREIT) that invests in a diversified portfolio of mortgage assets through residential mortgages, non-agency residential mortgage-backed securities (RMBS), asset-backed securities agency and agency commercial mortgage debt (CMBS). RMBS. Chimera has total assets of $12.5 billion.
Recently, on May 10, Chimera announced that its board of directors had approved a reverse stock split of its common stock with a 1-to-3 ratio. The split began with trading on May 22. Shares outstanding were reduced from 241.4 million to 80.5 million. Investors were not happy with the news and the stock fell from over $14 to a low of $11.28 in a month. It has since partially recovered to reach a recent close of $11.93.
On June 13, Chimera Investments announced a 6% increase in its quarterly dividend, from $0.33 to $0.35 per share.
Investors should note that Chimera’s total return (including dividends) is -60.53% since November 1, 2021 and that the mREIT has cut its dividend four times since 2020.
Real estate income company. (NYSE:Oh) is a San Diego-based triple net lease REIT with more than 15,450 properties in 89 areas and more than 1,500 tenants worldwide. The Monthly Dividend Company, as it calls itself, is a member of the S&P 500 and an S&P 500 Dividend Aristocrat, meaning it has been consistently paying and increasing its dividends for at least 25 years. Realty Income has increased its dividend 126 times since its 1994 IPO.
On June 4, Realty Income raised its full-year 2024 FFO guidance from $4.17 to $4.29 to $4.19 to $4.28 per share and its AFFO from $4.13 to 4, $21 to $4.15 to $4.21. Management attributed this increase to improvements to its European investment environment.
On June 11, Realty Income increased its monthly dividend from $0.2625 to $0.2630 per share, payable on July 15 to shareholders beginning July 1. This was the 126th dividend increase since Realty Income went public in 1994. The new monthly dividend brings the annualized dividend to $3.156 per share with a yield of 5.9%.
On June 12, Keybanc analyst Upal Rana initiated coverage on sector-weighted real estate income. No price target was given.
Realty Income remains one of the safest and most consistent income-oriented REITs money can buy.
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