Investing in dividend stocks is a wonderful way to pay bills, travel, help with a grandchild’s education, or enjoy a steady and stable income near or near retirement. But buying solid dividend companies isn’t always easy.
One way to measure a company’s performance is to look at its five-year dividend history. Five years of substantial dividend growth indicates that a company has performed well through good and bad economic cycles and speaks well of its current earnings and future prospects.
Look at a real estate investment trust (REIT) with an impressive five-year dividend growth performance and see how much a $10,000 investment in April 2018 is producing in dividends today.
Agree Realty Corp. ADC Nationwide is a net-lease REIT with 38 million square feet of rentable space in 1,839 properties. Its diverse investment-grade retail tenant portfolio includes Sherwin-Williams Co., Walmart Inc., The Home Depot Inc., TJX Cos. Inc., AT&T Inc., CVS Pharmacy Inc., Aldi, Wawa Inc. And many other well-established companies are unlikely to miss rent payments regardless of economic conditions.
Agree Development Co. of Agree Realty. was founded in 1971 as Agree Realty Corp. and launched its initial public offering (IPO) in 1994.
In April 2018, if you invested $10,000 in Agree Realty, you would have purchased 203.33 shares at $49.18 per share. Its most recent closing price was $67.66.
At that time the quarterly dividend was $0.54 per share and it increased fivefold to $0.62 per share through December 2020. From January 2021, Agri Realty decided to pay dividends monthly rather than quarterly. The first monthly dividend payment was $0.207. Since that time, the dividend has quadrupled and now pays $0.24.
The annual dividend in April 2018 was $2.16. The annual dividend is now $2.88, so the annual dividend has grown by 33.3% over five years.
Over five years, your original $10,000 investment would have earned you a total return of 62.89%, with $18.48 in appreciation and $12.45 in dividends paid. Your $10,000 investment will now be worth $16,288.95.
If, like many investors, you choose to reinvest your dividends, the original 203.33 shares will grow to 245.47 shares, making your investment worth $16,609.09.
Dividend growth is consistent with earnings and revenue growth over the past five years. Funds from operations (FFO) of $0.71 in the first quarter of 2018 has now increased to $0.95, and revenue of $34.57 million has more than tripled from $116.53 million in the fourth quarter of 2022. FFO and fourth quarter revenue numbers were good. than analysts’ estimates.
The payout ratio of $2.88 to FFO forward of $3.95 is 72.9%, which is above the safe range, but the dividend is still easily covered by FFO.
Agree Realty’s 52-week range is $63.34 to $80.44, and its recent closing price was $71.68. The ex-dividend date is usually on the last day or two of each month. Year to date, Agree Realty has a negative total return of 3.12% but has been performing well recently. Since March 23, it has returned a total of 4.56%.
If you’re an income investor, and you’re looking for a relatively safe REIT that yields 4.2% and pays monthly income, Agree Realty may be one to investigate.
Over the past five years, private market real estate investment has outperformed the publicly traded REIT market by nearly 50%. Check out Benzinga Real Estate Offer Screener To discover the latest passive real estate investments.
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