The Beauty Of REIT Dividend Aristocrats

May 10, 2023 4:05 PM ETESS, FRT, O11 Comments
Roberts Berzins, CFA
10.22K Followers

Summary

  • A portfolio exposure to dividend aristocrats is extremely topical in periods where the economic dynamics are volatile and imply an elevated probability of distress.
  • The problem with dividend aristocrat ETFs or just a pure-play replication of the entire universe of dividend aristocrats is that it provides an unattractive yield (~1.9%).
  • Realty Income, Essex Property Trust and Federal Realty Investment Trust are the only three equity REITs which are classified as dividend aristocrats.
  • An exposure to equity REITs, which are considered dividend aristocrats, provides a solution by offering a yield of ~4.5% that is underpinned by conservative FFO payout ratio and capital structure.

stack of silver coins with trading chart in financial concepts and financial investment business stock growth

Sakorn Sukkasemsakorn

During times of elevated probability for distress, stability and income predictability are becoming increasingly important factors within typical investor portfolios. While these "flight-to-safety" dynamics warrant the necessary de-risking of portfolio, they tend to inflict damage on the yield and its prospects of growth.

This article was written by

10.22K Followers
Roberts Berzins has over a decade of experience in the financial management helping top-tier corporates shape their financial strategies and execute large-scale financings. He has also made significant efforts to institutionalize REIT framework in Latvia to boost the liquidity of pan-Baltic capital markets. Other policy-level work includes the development of national SOE financing guidelines and framework for channeling private capital into affordable housing stock. Roberts is a CFA Charterholder, ESG investing certificate holder, has had an internship in Chicago board of trade (albeit, being resident and living in Latvia), and is actively involved in "thought-leadership" activities to support the development of pan-Baltic capital markets.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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SymbolLast Price% Chg
ESS--
Essex Property Trust, Inc.
FRT--
Federal Realty Investment Trust
O--
Realty Income Corporation

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