Stock Commentary

AREIT maintains dividend dominance

Merkado Barkada
AREIT maintains dividend dominance

AREIT [AREIT 34.00, up 0.3%] [link] declared a Q4/23 dividend of P0.55, payable on March 20 to shareholders of record as of March 4. The dividend has an annualized yield of 6.47% and a trailing 12-month (TTM) yield of 6.32%. The total amount of the dividend is P1303 million, which is 87% of the P1500 million in distributable income that AREIT reported for the quarter. Relative to AREIT's IPO price, the dividend increased AREIT's total stock and dividend return to 52.67%, up from its pre-dividend total return of 50.63%. The stock is up 1.8% year-to-date (YTD). AREIT’s full-year distribution ratio settled at 90.3%.

MB bottom-line: This is the 14th consecutive dividend that AREIT has declared that has been as big or bigger than the one that has come before. AREIT’s first quarterly dividend (Q2/20) was P0.28/share, so without shareholders having to do anything, their dividend return per share has increased 98% in just under four years. They aren’t the only REIT to successfully grow its dividend, but they are the only one to have grown it so much and it’s not really even close. That said, owning AREIT isn’t riskless. It’s exposed to whatever might happen to the commercial real estate market should the government implement a POGO ban. Sure, they’re trying very hard to stuff as many non-office assets in AREIT to soften this potential blow should it come to pass, but it’s important to recognize that another significant downturn in Metro Manila office rental rates will put downward pressure on the income that AREIT will be able to earn from its office assets as leases expire and new tenants are brought onboard.   


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