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Stock Commentary

AREIT declares larger Q2 div payable on September 9

Merkado Barkada
AREIT declares larger Q2 div payable on September 9

AREIT [AREIT 37.00 0.54%] [link] declared a Q2 dividend of P0.49/share, payable on September 9 to shareholders of record on August 26.

The Q2 div is 2.1% larger than its Q1 div of P0.48/share, and 11.4% larger than its Q2/21 div of P0.44/share.

Based on a share price of P37, AREIT’s estimated annual yield increased from 5.19% to 5.30%, and its total return (stock price plus all-time dividends) increased from 50.3% to 52.1%.

AREIT is up 37% from its IPO price of P27/share and is up 2% over the last 12 months, but it is down 24% so far this year.
 

MB BOTTOM-LINE

While all REIT stock prices continue to get trucked by rising interest rates, at least the commercial REIT business model has shown some strength, and most commercial REITs have been able to deliver larger dividends on a quarter-on-quarter and year-on-year basis.

AREIT’s stock is actually down 29% from its early January high of P52/share, so there are either a large number of anxious bagholders or a large number of long-term bettors with proverbial diamond hands.

Probably it’s a mix of both.

But regardless of the category, it makes it easier when AREIT continues to grow its div to reward that patience. I can’t say the same for Filinvest REIT [FILRT 6.50 3.85%], which dropped a div which was 24% lower, that when annualized, provides an estimated yield that is comparable to that of AREIT.

If we consider AREIT to be the gold standard commercial REIT, how could the market price the risk/reward of FILRT’s income stream at a yield of 5.42% when AREIT is trading at 5.30%?

My gut (and data) says that we should expect the FILRT stock price to float downward to bring its estimated annualized yield back up to the mid-to-high 6% range, but maybe it would take some time for that to happen.

It wouldn’t be the first REIT that looks and feels weirdly priced according to its yield so maybe that’s just the way it is. 

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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

AREIT

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PHILIPPINE STOCK EXCHANGE

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