Boston Properties, Inc (BXP), a real estate investment trust (REIT), recently increased its quarterly dividend from 55 cents to 65 cents. The new dividend is payable on December 31, 2012 to shareholders of record as of January 29, 2013.
At the end of third quarter 2012, Boston Properties had cash and cash equivalents of $1.2 billion. Boston Properties has a strong balance sheet, which provides the financial flexibility to pursue accretive acquisitions and dividend payouts. This augurs well for its long-term growth. The ongoing financial strength has led to the company increasing the quarterly rate of dividends by 18.0%.
A steady dividend payout facilitates the long term strategy of Boston Properties to provide risk-adjusted returns to its shareholders. Solid dividend payouts are arguably the best enticement for REIT investors as U.S. law requires REITs to distribute 90% of their annual taxable income in the form of dividend to shareholders.
Boston Properties reported third quarter 2012 FFO (funds from operations) of $176.1 million or $1.16 per share, compared with $190.3 million or $1.28 per share in the year-earlier quarter.
Massachusetts-based Boston Properties owns and develops one of the largest first-class office portfolios in the U.S. The company concentrates on a few select high-rent, high barrier-to-entry geographic markets which usually fare better in a faltering economy.
Boston Properties currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We also maintain our long-term Neutral recommendation on the stock. One of its competitors, Vornado Realty Trust (VNO) currently also retains a Zacks #3 Rank.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.