Shares of Alpine Income Property Trust, Inc. (PINE Quick QuotePINE ) gained 1.2% after the company announced a 2% sequential hike in its third-quarter cash dividend. It will now pay out a dividend of 25.5 cents per share, up from 25 cents disbursed in the prior quarter. The increased dividend will be paid out on Sep 30 to its shareholders of record as of Sep 9, 2021.
Based on the raised rate, the annual dividend came to $1.02 a share, resulting in an annualized yield of 5.5%, considering the company’s closing price of $18.51 on Aug 20.
Can Alpine Maintain Its Payout?
Alpine’s ability to sustain the hiked dividend depends on the growth rate of its funds from operations (FFO) and the payout ratio. The company’s current payout ratio of 60.3% is lower than its industry’s average of 67.6%, indicating scope for its steady dividend increase.
The company has a decent surprise history. Its FFO surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missing the mark in one and meeting the same in the other, the average beat being 2.02%. Its performance this depicts a robust FFO picture. Its FFO is projected at a growth rate of 17.3%, higher than the industry average of 5.9%.
The company is keen on increasing its asset base and enhancing its portfolio on the back of acquisitions of high-quality real estate. It also intends to focus on well-performing tenants. This is likely to drive revenues, indicating that its dividends are well-covered and that the company will be able to sustain its currently hiked dividend.
In fact, Alpine’s revenues for the ongoing year are projected to increase 37.6% year over year.
This aside, the company boasts a decent balance sheet with ample liquidity and no near-term debt maturities, underpinning its financial stability and flexibility. Hence, the chances of the company slashing or suspending dividends in case of negative externalities are less. This reflects sustainability of its dividends.
Alpine remains committed to add shareholder value through dividend hikes. As of Jun 30, 2021, the company upped its quarterly dividend by 25% over the past year. We believe that such disbursements highlight the company’s operational strength and commitment toward rewarding its shareholders handsomely.
Shares of this currently Zacks Rank #5 (Strong Sell) company have inched up 0.7% in the past six months, underperforming the industry’s rally of 18.1%.
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As investors are always on the lookout for companies with a track record of consistent and incremental dividend payments to bet their money on, solid dividend payouts are therefore arguably the biggest enticement for REIT investors. Such strategic moves also boost investors’ confidence in the stock and will likely bump up the company’s shares in the upcoming period.
In the past few months, several finance companies have raised their quarterly dividends.
Bank OZK (OZK Quick QuoteOZK ) announced a quarterly dividend hike of 1.8%, which increases the total to 28.5 cents per share while Associated Banc-Corp (ASB Quick QuoteASB ) declared a dividend of 20 cents, representing a hike of 11.1% from the prior payout.
Spirit of Texas Bancshares, Inc. (STXB Quick QuoteSTXB ) announced that its board of directors approved a dividend hike of 33.3%, raising the amount to 12 cents per share.