4 High-Yield Stocks About To Boost Their Dividends

| March 13, 2017 | 0 Comments

increasing dividendBuilding a portfolio of dividend stocks that regularly increase their payments to you has never been more important with the stock market at all-time highs and multiple rate hikes on the horizon. Add these income stocks to your portfolio today, before they announce their increases, and see the stock prices pop on the news. 

With a pending interest rate increase from the Fed, I have been receiving questions on whether REIT values will be hurt by rising rates. It is a widely held, but inaccurate, belief that REIT values must fall if interest rates continue to increase.

The fact that many REITs increase their dividends over time tells us that these are businesses with potential for growing dividends and share values even in a rising rate environment.

Over the weekend, I read an article that looked at the history of REIT values and interest rates. Since 1995, there has been 16 periods of significantly rising interest rates. Out of those 15 years, REIT values increased in 12 of them, or in other words, 75% of the time.

The fact is that REIT results are driven more by economic conditions, rising commercial real estate values, and the ability of REITs to increase the rental rates on their properties. We can monitor how well a REIT is performing from its history of dividend growth. Most REITs announce any dividend increases once a year, in the same month each year.

Across the sector, there are increase announcements in almost every month in the calendar. You can often get a nice share price gain by buying shares before a dividend increase announcement hits the news wires.

I maintain a database that covers about 140 REITs. I use the database to track dividend rates, yields and increases. Of the 140, about 90 have histories of regular dividend increases. There are four REITs that should announce a dividend increase in April.

American Campus CommunitiesAmerican Campus Communities, Inc. (NYSE:ACC) owns, manages, and develops primarily off-campus student housing properties in the United States. The company owns over 200 properties near 96 college campuses. While some growth comes from acquisitions or development, ACC also realizes 2.5% per year of average rental rate growth.

Since resuming dividend increases in 2013, the payout has been increased by 5% to 6% for four consecutive years. In 2016, FFO per share was flat compared to 2015. However, the current dividend is just 74% of FFO, so a small increase is still likely for this year to keep the growth record going.

The new dividend rate is announced at the end of April/early May with an end of May payment date. ACC currently yields 3.5%.

Hospitality Properties TrustHospitality Properties Trust (NYSE:HPT) owns 306 hotels and owns or leases 198 travel centers located throughout the United States, Canada, and Puerto Rico. All of the properties are leased to management operators. In 2017, FFO per share was up 7.7% over 2015. The previous year, FFO was up by just 1.5%.

The current dividend rate is 57% of 2016’s FFO. For the last several years, HPT has been increasing the dividend by about 2% annually. The new dividend rate has been announced in mid-April, with a late April record date and second half of May payment date. HPT yields 6.6%.

Life Storage Inc.Life Storage Inc. (NYSE:LSI) owns 650 self-storage facilities located in 29 states. Self-storage is a rapid growth REIT sector. Life Storage has grown its dividend by an average of 15% per year for the last five years, and the company increased its dividend by 12% in 2016.

For last year, FFO per share increased by 5%, so investors should look for a single-digit dividend increase. If a boost is coming in April it will be announced near the start of the month for the dividend to be paid at the end of April. The stock yields 4.3%.

Tanger Factory Outlet Centers Inc.Tanger Factory Outlet Centers Inc. (NYSE:SKT) was the pioneer in developing factory outlet malls. The company has increased its dividend every year since its 1993 IPO. Over the last five years, the payout has grown at a 9.7% annual compounded rate, including a 14% increase last year.

In 2016, AFFO per share increased by 7%, so a high single-digit rate boost should be announced this year. The next dividend will be announced in early April with and end of April payment date. SKT currently yields 3.9%.

Note: This article originally appeared at Investors Alley.

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Category: Dividend Stocks To Buy?

About the Author ()

Tim Plaehn is the lead investment research analyst for income and dividend investing at Investors Alley. He is the editor for The Dividend Hunter, an investment advisory delivering income investments with double digit growth in share price and dividend payments, and 30 Day Dividends, a specialty income service that takes advantage of opportunities for relatively fast, attractive profits around potential dividend payouts.

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