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Tag Archives: Dividend Hike

Dividend Hike By AEC

And Associated Estates Realty, my little diamond in the rough, has once again raised its dividend following an absolutely wonderful quarter. The move represents a 5.6% increase in payout, bringing the annual yield back up to around 5% from the days’ open.

The stock is up 2% on the announcement, but that’s no consolation.

AEC has been crushed over the last 6 months as trolling analysts and crack addicted gamblers were pissed off that the company decided it was better to control their debt than make failed bids at grand slams and gluttonous attempts at devouring the entire apartment market on nothing but a smile and a signature.

By doing things their more conservative way, not only have profit margins continued to improve, but the company’s operations have become more consolidated, lower cost, containing higher value properties, and lower influence from interest rate swings.

And, because they decided to tender their debt load, they’ve been catching ratings upgrades, which will only serve to save the shareholder more in earnings down the road.

Recently, a series of articles have come out suggesting the Multifamily REIT boom is over, because the resurge in housing prices is foretelling a collapse in occupancy and rates. A second, alternate version of this storyline suggests that because a house could, theoretically, cost less than renting an apartment, we would see a huge shift away from rental occupancy and downward pressure on rates.

Sorry, but no, that’s not how attaining mortgages works.

I continue to forecast strong outperformance from the REIT multifamily sector. And, when the market finally catches on, these stocks will have a long way to go before they’re pricing that in properly.

In the meanwhile, AEC and CLP continue to see FFO bulging. And since that’s money going straight to my pocket, I guess I’ll just have to enjoy these dividend hikes while I wait.

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