Armada Hoffler Properties Continues Raising Dividends With A 5.3% Boost (AHH)

Posted: Mar 16, 2018 9:09 AM

Armada Hoffler Properties, Inc. (NYSE: AHH) is continuing the trend of increasing its annual dividend payout, as the next quarterly distribution represents a 5.3% increase over the previous quarter’s payout.

Armada Hoffler began paying dividends in 2013 and has raised its annual distribution amount every year since then. With the upcoming dividend hike, the company’s forward yield sits at 5.8%.

In addition to several years of consecutive dividend increases, Armada’s share price increased 25% over the last two years. After a rocky first half of 2017, AHH soared and reached an all-time high in December 2017. Unfortunately, the share price declined through the end of January 2018 and then dropped significantly in the first week of February along with the rest of the market. However, the share price has been rising since the February sell-off and is again higher than it was one year earlier at the same time.

Armada’s next ex-dividend date will be on March 27, 2018 and the company will distribute the next quarterly dividend to shareholders on the April 5, 2018 pay date.

Armada Hoffler Properties, Inc. was founded by Charles Hoffler in 1979 and was based in Chesapeake, Virginia. In 2003, the company moved its headquarters to Virginia Beach. After operating for 34 years as a private entity, the company completed a $218 million initial public offering (IPO) on May 8, 2013 and became a publicly traded REIT.

The REIT owns and manages a diversified portfolio of office, retail and multi-family facilities throughout the mid-Atlantic and southeastern United States, with a concentration of assets strategically located in the Baltimore, Washington, D.C. and coastal Virginia areas, as well as a selection of high-population-density markets throughout North and South Carolina. As of October 10, 2017, the company’s asset portfolio consisted of 47 properties in seven states, more than 4.4 million square feet of space and more than 1,200 residential units, which are currently leased at 95% core occupancy.

Armada hiked its quarterly dividend payout of $0.19 per share by 5.3% to the $0.20 quarterly distribution coming up in April. This new quarterly amount converts to an $0.80 annualized dividend payout and a yield of 5.8%. This amount is 5.4% above the REIT’s own 5.5% average yield over the past five years.

In addition to outperforming its own average yield, Armada Hoffler Properties’ current yield also outperforms its industry peers. The 5.8% current yield is nearly 30% above the simple average yield of all the companies in the Diversified Industrial REITs segment and more than 50% higher than the current 3.8% average yield of the entire Financials sector.

Since its conversion to a REIT in 2013. the company has been paying rising dividends every year. Over the past five years, Armada has hiked its annual dividend an incredible 233%, going from an annual $0.24 per share payout in 2013 to an expected $0.80 distribution for 2018.

AHH’s share price began its trailing 12-month period with two up-and-down cycles,  each representing a price swing of 10% or more. After hitting a low of $12.67 on July 11, 2017, the share price settled into a steady growth pattern and ascended more than 25% with minimal volatility to reach a new high of $16.01 on December 18, 2017.

However, the return of volatility in January combined with the sell-off in the broader market in February 2018 caused the share price to fall nearly 20%. The closing price of $12.82 on February 6, 2018 was merely 1.1% above the 52-week low from July 2017. However, after the February low, AHH’s share price reversed direction and rose 9.5% by March 14, 2018, when it closed at $13.88.

The combined benefit of the dividend income and capital growth over the past few years rewarded the company’s shareholders with a 9.6% total return in the past 12 months and more than a 50% total return over the past three years.