Apartment Investment and Management Company (AIV) – a real estate investment trust (REIT) better known as Aimco – announced a 20% sequential hike in its quarterly cash dividend rate. The company will now pay a dividend of 24 cents per share of Class A Common Stock compared with 20 cents paid in the prior quarter. The increased dividend will be paid on Feb 28, 2013 to stockholders of record on Feb 15.
This represents the third dividend raise at Aimco since Jan 2012. Moreover, on an annualized basis, it reflects an increase of 26% compared with dividends paid during 2012. Undoubtedly, a steady dividend payout facilitates the long-term strategy of Aimco to provide attractive risk-adjusted returns to its stockholders.
Moreover, the dividend hike reflects solid performance and meticulous execution of strategic plans at Aimco, which is one of the largest owners and operators of multifamily apartments in the U.S. Notably, the company is currently repositioning its portfolio to focus on markets that have better job and rent growth prospects. Such strategic moves will prove accretive to its earnings going forward.
Therefore, with strong quarterly results, we believe that the company is well poised to maintain its growth curve and simultaneously benefit the shareholders with steadily rising dividends and hence we remain encouraged.
As a matter of fact, solid dividend payouts are arguably the biggest attraction for REIT investors as the U.S. law requires these companies to distribute 90% of their annual taxable income in the form of dividends to the shareholders.
In addition to Aimco, a number of REIT firms have increased their dividend payouts in recent times. This includes AvalonBay Communities Inc. (AVB), which hiked its quarterly dividend by 10.3% to $1.07 per share earlier this week. Moreover, Vornado Realty Trust (VNO) increased its quarterly dividend by 5.8% to 73 cents while DDR Corp. (DDR) raised its quarterly dividend by about 12.5% to 13.5 cents this month.
Aimco is scheduled to release its fourth-quarter 2012 results on Feb 7. The Zacks Consensus Estimate for the company’s fourth-quarter FFO (funds from operations) is currently pegged at 50 cents per share. Aimco currently carries a Zacks Rank #3 (Hold).
Note: Fund from operations, 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.