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Commercial REITs in 2Q17: A Close Look at the Top 3

PART:
1 2 3 4 5 6 7
Part 6
Commercial REITs in 2Q17: A Close Look at the Top 3 PART 6 OF 7

Commercial REIT Shareholder Returns in 2Q17

Why dividend yield is important for REITs

REITs are known to be good for shareholder returns. These companies have to pay 90.0% of their profits to shareholders in the form of distributing dividends or repurchasing shares.

Commercial REIT Shareholder Returns in 2Q17

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Commercial REITs usually give back generous dividends to their investors. We’ll have a look at how the three commercial REITs—Simon Property Group (SPG), Vornado Realty Trust (VNO), and GGP (GGP)—distributed their profits among shareholders.

During 2Q17, SPG announced a quarterly dividend of $1.80 per share, a 9.1% rise from its previously distributed dividend. The new dividend is to be paid on August 31, 2017.

In 2Q17, GGP paid $17.5 million in dividends to its shareholders, which was more than $13.3 million paid a year ago. GGP also announced a quarterly dividend of $0.22 per share, which was 10.0% higher than the previous year.

VNO paid $0.71 per share in dividends during 2Q17, which was higher than $0.63 paid a year ago.

Share repurchase

As of 2Q17, Simon Property Group bought back more than 1.5 million shares as part of its stock repurchase program. SPG also announced a share repurchase program of up to $2.0 billion in common stock by 2019. GGP and VNO didn’t announce any share buyback programs during the quarter.

GGP offers maximum dividend yield

GGP has a dividend yield of 4.4%. SPG offers a dividend yield of 4.3%, and VNO offers a dividend yield of 3.3% for 2017.

Dividend payout ratio

The dividend payout ratio is a common ratio used to measure a company’s shareholder return. It implies the amount of profit that the REIT distributes among its shareholders.

SPG’s dividend payout ratio is 70.8%. GGP offers a dividend payout ratio of 62.85%. Vornado, on the other hand, has a dividend payout ratio of 56.8%.

SPG, GGP, VNO, and Prologis (PLD) together constitute 14.0% of the Vanguard REIT ETF (VNQ). VNQ has a yield of 4.3%.

In the final part of this series, we’ll look at the valuations for these REITs.

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