We are almost at the end of another year, and I hope your dividend income stream has marched steadily higher throughout 2019.
Tracking your dividend income and managing your portfolio to grow that income makes it easier to go through market corrections as we saw in the final quarter of last year. (If you’re having trouble tracking your dividend payments check out my new online dividend tracking tool.)
One bit of assistance I like to provide is to list those real estate investment trusts (REITs) that should announce higher dividend rates in the upcoming months. This knowledge can give you a jump on the rest of investing public, which will be surprised when the positive news is actually announced.
I maintain a database of about 130 REITs. With it, I track current yields, dividend growth rates, and when these companies usually announced new dividend rates. Most REITs announce a new dividend rate once a year, and then pay that rate for the next four quarters.
Currently, about 85 REITs in my database have recent and ongoing histories of dividend growth. Out of that group, higher dividend announcements will happen during almost any month of the year. In the face of market volatility, REIT values held up reasonably well in 2018. Dividend increases are the best defense against higher market interest rates. Higher dividend announcements may be the catalyst to higher share prices for individual REIT shares.
My list shows five companies that historically announce higher dividends in December and should do so again this year. Investors will start earning higher payouts in the new year. Remember, you want to buy shares before the dividend announcement to get the benefit of a share price bump caused by the positive news event.
Here five on my short list you might want to consider:
Ventas, Inc. (VTR) is a large-cap REIT that owns a portfolio of properties leased by companies providing the full range of healthcare services.
Ventas has done very well for investors, growing its dividend at a compounding 8% annual rate since 2001. For the last three years, revenue and cash flow growth has been a challenge across all healthcare REITs.
Ventas has sold some assets and used the proceeds to pay down debt. As a result, the company’s balance sheet is stronger, but normalized FFO per share growth has been flat.
Ventas increased the dividend by just 0.3% last year. I expect a more meaningful increase this year. The next dividend will be declared around December 10th, with a mid-month ex-dividend date and payment at the end of the year.
VTR yields 4.9%.
CubeSmart (CUBE) is a mid-cap sized self-storage property REIT. This has been a fast growth REIT, with the dividend growing by 132% over the last five years.
Growth in the self-storage space has moderated, but this means a decline to high single-digit annual growth from the previous double-digit per year rates.
Last year the dividend was increased by 6.7%, slightly above my forecast. This year I expect the dividend to be raised by 5% to 6%. The new dividend rate will be announced in mid-December.
The stock will go ex-dividend at the end of December with payment in mid-January.
CUBE yields 4.0%.
CoreSite Realty Corp (COR) is a data center REIT. Data centers are one of, if not the fastest-growing REIT subsector. Over the last year, the company increased its dividend by 18%.
Over the last couple of years, CoreSite has been announcing a higher dividend every other quarter. The last increase two quarters ago increased the payment to investors by 11%.
Free cash flow growth is slower this year, but another rate bump of 3% to 4% is very possible.
The next dividend increase should be announced in early December, with ex-dividend at the end of the month, and the dividend will be paid in mid-January. COR yields 4.1%.
Douglas Emmett, Inc. (DEI) is a regionally focused REIT, owning and operating office and multi-family properties in California and Hawaii. The has a strong focus on developing new properties or redeveloping currently owned properties for higher, better use – and rents.
The DEI dividend has been increased every year since 2011. Last year the payout was increased by 4%. The five-year compound dividend growth rate is 6.4%. The current dividend is just 50% of FFO, with cash flow per share growing by about 5% per year.
I forecast another 4% to 6% dividend increase to be announced on about December 8. Ex-dividend will be at the end of December, and the payment will be in mid-January.
DEI yields 2.4%.
Mid-America Apartment Communities (MAA) owns 305 apartment communities with over 100,000 homes. The communities are in seventeen states, throughout the Southeast, Southwest, and Mid-Atlantic regions of the United States.
With the ongoing housing shortage in many areas, apartments REITs are hot investments. The company has increased its dividend for 10 straight years.
Typical increases have been in the mid-single-digits. Last year the MAA dividend was increased by 4.1%.
The next dividend announcement will come out in early December. The ex-dividend will be in mid-January with payment at the end of January.
The shares currently yield at 2.8%.
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