The potential of regular dividend increases is one factor that sets REITs apart from many other higher yield types of investments. With the REIT sector acting pretty ugly over the last month or so, an announced dividend increase can be the catalyst to move a share price higher, even in the face of a volatile or down market. If that is what you’re looking for as an investor, then look no further as these 4 REITs look to be prime candidates for dividend increases.
Most REITs that have histories of dividend growth pay quarterly dividends and announce an increase once a year. Some REIT companies increase their payout every quarter and a few more that will increase the dividend at random intervals. As a result, announced dividend increases from the REIT sector happen every month of the year. If you buy shares before a dividend increase is announced, you have a good chance of getting a nice share price increase when the market figures out that a REIT’s dividend has grown and the share price should go up to keep the yield in line. Each month I review my database of about 120 REITs to ferret out those that are scheduled by historical precedent to increase their dividends in the next month. Here are the four REITs that should (or at least have a high probability to) announce dividend increases in April.
Hospitality Properties Trust (NYSE:HPT) typically announces a dividend increase in the first week of April. In the company’s 2014 year end results, normalized funds from operations, FFO, per share increased by 10% compared to 2013. The dividends paid in 2014 were just 59% of the FFO generated for the year. HPT yields 6.15% and a 10% dividend boost would not be out of line.
Tanger Factory Outlet Centers Inc. (NYSE:SKT) should also announce a dividend increase in the first week of April. For 2014, Tanger’s adjusted FFO per share increased by 4.9% compared to 2013 cash flow. The 2014 dividend was 49% of FFO per share, a very low REIT payout ratio. SKT is one of the most highly regard mall REITs and has increased its dividend for 21 consecutive years, every year since its IPO. The SKT dividend was increased by 6.7% last year. Expect a similar increase this year and the stock yields 2.7%.
