Dividend history matters.
It takes a durable and defensible competitive advantage to deliver rising dividends for long periods of time. All else being equal, a company with many years of steadily increasing dividends is more likely to deliver rising income during the future.
That’s why the Dividend Kings are an excellent place to look for potential investments. To be a Dividend King, a company must increase its dividend each year for 50 consecutive years.
It isn’t every day that a company increases its dividend for the 50th straight year.
However, Federal Realty Investment Trust (FRT) recently did just that, making it the newest member of the Dividend Kings.
Something must be special about Federal Realty – it stands out as the only real estate investment trust to be a member of the Dividend Kings.
With that in mind, this article will analyze the business model and investment prospects of Federal Realty Investment Trust in detail.
Business Overview
Federal Realty Investment Trust is a real estate investment trust (REIT) that focuses on the ownership, management, and redevelopment of high-quality shopping centers and mixed-use properties in urban locations.
The trust is a member of the S&P 500 and has impressive size, with 98 large mall properties, 23.1 million square feet of gross leasable area, and a market capitalization of nearly $10 billion. The majority of Federal Realty’s properties are in cities near the U.S. coastlines, including Los Angeles, New York, Boston, San Fransisco, and Philadelphia.
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Source:Â Federal Realty Investment Trust First Quarter 2017 Investor Presentation, slide 2
Federal Realty has the longest record of consecutive dividend increases of any real estate investment trust, of which there are about 172. It is also the only REIT to be a Dividend King.
Interestingly, this is also Federal Realty’s first year as a member of the Dividend Aristocrats (dividend stocks with 25+ years of consecutive dividend increases) despite its July 31st announcement of its 50th consecutive annual dividend increases.
On the surface, this does not make sense. There should be 25 years between a company inclusion in the Dividend Aristocrats and a company’s inclusion in the Dividend Kings.
However, the Dividend Aristocrats is a stock market index maintained by S&P (while the Dividend Kings list is maintained independently). There are additional requirements to be a Dividend Aristocrat besides the 25 years of consecutive increases.
