Quarterly dividend of $0.73 exceeds expectations
On September 3, Ventas (VTR) declared a regular quarterly dividend of $0.73 per share payable on September 30. The ex-dividend date of this dividend was September 11. This represents an annual dividend of $2.92, equivalent to a dividend yield of 5.5%.
This is the first dividend declaration following the spin-off of the company’s skilled nursing facility portfolio Care Capital Properties (CCP). In a prior report, the company had mentioned a dividend growth of 10% over the prior dividend payment of $0.79, which amounts to a dividend expectation of $0.87. If we include the dividend of $0.57 declared by Care Capital Properties, this is in line with expectations. This is equivalent to $0.1425 per share on a 1:4 adjustment basis.
High dividend yields compared to those of peers
At current prices and excluding the dividend of Care Capital Properties, a dividend of $0.73 is equivalent to a dividend yield of 5.5%, which is much higher than the industry average yield of 3.9%. Among the 23 REITs that constitute the Financial Select Sector SPDR ETF (XLF), only Iron Mountain (IRM) and HCP have higher estimated dividend yields of 6.73% and 6.09%, respectively.
Wall Street (SPY) experts now expect the Fed to delay its plans of raising interest rates due to weak global sentiment, as growth in emerging market economies has begun to falter. This could be positive for the REIT stocks in particular, as it makes them attractive dividend stocks with the current low interest rates.