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Equity Residential (EQR) Hikes Dividend by 1.9%: Worth a Look?
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Equity Residential (EQR - Free Report) has announced a 1.9% hike in its annualized dividend. As a result, for the first quarter of 2024, EQR will pay out 67.50 cents per share, up from 66.25 cents paid out in the prior quarter. The new dividend will be paid out on Apr 12 to the company’s shareholders of record as of Mar 25, 2024.
Based on the hiked rate, the annualized dividend comes at $2.70 per share. At this new rate, the annualized yield is 4.33%, based on the stock’s closing price of $62.37 on Mar 14, 2024.
The residential REIT also announced that its annual meeting of shareholders would be held on Jun 20, 2024.
The latest raise reflects Equity Residential’s ability to generate solid cash flow through its operating platform and high-quality portfolio. Prior to this increase, EQR increased its dividend four times in the past five years, and its payout has grown 3.39% over the same period. Check Equity Residential’s dividend history here.
EQR is well-poised to benefit from its portfolio diversification efforts in the urban and suburban markets with an affluent tenant base. Healthy demand for its apartments has been aiding occupancy levels in recent quarters.
In January 2024, Equity Residential reported fourth-quarter 2023 normalized funds from operations (FFO) per share of $1.00, which was in line with the Zacks Consensus Estimate. The rental income of $699.7 million exceeded the consensus mark of $697.1 million. On a year-over-year basis, the normalized FFO per share grew 6.4% from 94 cents, with rental income climbing 4%.
For 2024, Equity Residential projects normalized FFO per share in the band of $3.80-$3.90. The company’s full-year guidance incorporates projections for same-store revenue growth of 2.0-3.0%, an expense increase of 3.5-4.5% and an NOI expansion of 1.0-2.6%. Also, physical occupancy is expected at 95.9%.
The company’s strategic buyouts, encouraging development pipeline, and focus on technology and organizational capabilities to drive margin expansion and operational efficiency act as tailwinds. Also, a healthy balance sheet position bodes well.
Equity Residential exited 2023 with cash and cash equivalents of $50.7 million. In the fourth quarter of 2023, net debt to normalized EBITDAre was 4.12X compared with 4.24X in the previous quarter. The unencumbered NOI as a percentage of the total NOI was 89.8% in the quarter, remaining unchanged from the prior quarter.
With solid credit metrics and sufficient access to capital markets at favorable rates, the company is well-poised to meet its future obligations, as well as ride its growth curve. However, elevated supply in some of Equity Residential’s markets is likely to fuel competition and curb pricing power. Elevated interest rates add to its concerns.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have gained 1.3% against the industry’s decline of 1.2%.
The Zacks Consensus Estimate for SKT’s 2024 FFO per share stands at $2.03, indicating an increase of 3.6% from the year-ago reported figure.
The Zacks Consensus Estimate for SLG’s 2024 FFO per share is pegged at $5.88, suggesting year-over-year growth of 19%.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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Equity Residential (EQR) Hikes Dividend by 1.9%: Worth a Look?
Equity Residential (EQR - Free Report) has announced a 1.9% hike in its annualized dividend. As a result, for the first quarter of 2024, EQR will pay out 67.50 cents per share, up from 66.25 cents paid out in the prior quarter. The new dividend will be paid out on Apr 12 to the company’s shareholders of record as of Mar 25, 2024.
Based on the hiked rate, the annualized dividend comes at $2.70 per share. At this new rate, the annualized yield is 4.33%, based on the stock’s closing price of $62.37 on Mar 14, 2024.
The residential REIT also announced that its annual meeting of shareholders would be held on Jun 20, 2024.
The latest raise reflects Equity Residential’s ability to generate solid cash flow through its operating platform and high-quality portfolio. Prior to this increase, EQR increased its dividend four times in the past five years, and its payout has grown 3.39% over the same period. Check Equity Residential’s dividend history here.
EQR is well-poised to benefit from its portfolio diversification efforts in the urban and suburban markets with an affluent tenant base. Healthy demand for its apartments has been aiding occupancy levels in recent quarters.
In January 2024, Equity Residential reported fourth-quarter 2023 normalized funds from operations (FFO) per share of $1.00, which was in line with the Zacks Consensus Estimate. The rental income of $699.7 million exceeded the consensus mark of $697.1 million. On a year-over-year basis, the normalized FFO per share grew 6.4% from 94 cents, with rental income climbing 4%.
For 2024, Equity Residential projects normalized FFO per share in the band of $3.80-$3.90. The company’s full-year guidance incorporates projections for same-store revenue growth of 2.0-3.0%, an expense increase of 3.5-4.5% and an NOI expansion of 1.0-2.6%. Also, physical occupancy is expected at 95.9%.
The company’s strategic buyouts, encouraging development pipeline, and focus on technology and organizational capabilities to drive margin expansion and operational efficiency act as tailwinds. Also, a healthy balance sheet position bodes well.
Equity Residential exited 2023 with cash and cash equivalents of $50.7 million. In the fourth quarter of 2023, net debt to normalized EBITDAre was 4.12X compared with 4.24X in the previous quarter. The unencumbered NOI as a percentage of the total NOI was 89.8% in the quarter, remaining unchanged from the prior quarter.
With solid credit metrics and sufficient access to capital markets at favorable rates, the company is well-poised to meet its future obligations, as well as ride its growth curve. However, elevated supply in some of Equity Residential’s markets is likely to fuel competition and curb pricing power. Elevated interest rates add to its concerns.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have gained 1.3% against the industry’s decline of 1.2%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Tanger Inc. (SKT - Free Report) and SL Green Realty (SLG - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for SKT’s 2024 FFO per share stands at $2.03, indicating an increase of 3.6% from the year-ago reported figure.
The Zacks Consensus Estimate for SLG’s 2024 FFO per share is pegged at $5.88, suggesting year-over-year growth of 19%.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.