Delighting its shareholders, Regency Centers Corporation REG has announced a 5.2% increase in its quarterly common stock dividend to 70.5 cents. This marks its 11th successive year of increases. The increased amount will be paid out on Jan. 3, 2025 to shareholders on record as of Dec. 16, 2024.

Reflecting positive sentiments, shares of Regency were up more than 1% during yesterday’s trading session.

The latest dividend rate marks an annualized amount of $2.82 per share compared with the prior rate of $2.68. Based on the company’s share price of $73.87 on Nov. 7, the latest hike results in a dividend yield of 3.82%.

Solid dividend payouts are the biggest attraction for REIT investors, and Regency is committed to boosting shareholder wealth. This retail REIT has steadily grown dividends per share since 2014 and maintained dividend payments through the COVID-19 pandemic. From 2014 through 2023, the company’s dividend witnessed a CAGR of 3.8%. In the last five years, REG has increased its dividend five times and has a five-year annualized dividend growth rate of 3.29%. Check Regency Centers’ dividend history here.

REG’s Business Model Supports Sustainable Dividend Payment

The latest hike reflects Regency’s ability to generate decent cash flow through its operating platform and high-quality portfolio. It has a high-quality open-air shopping center portfolio, with more than 80% grocery-anchored neighborhood and community centers. This focus on building a premium portfolio of grocery-anchored shopping centers is a strategic fit because such centers are usually necessity-driven and attract dependable traffic. 

In uncertain times, the grocery component has benefited retail REITs, and Regency has numerous industry-leading grocers such as Publix, Kroger KR, Albertsons Companies, TJX Companies, Inc. TJX and Amazon/Whole Foods as tenants. Six of Regency’s top 10 tenants are high-performing grocers. The focus on necessity, service, convenience and value retailers serving the essential needs of the communities provides Regency with a strategic advantage. 

Regency’s premium shopping centers are situated in affluent suburban areas and near the urban trade areas where consumers have high spending power. This enables the company to attract top grocers and retailers. 

Regency also came up with solid results recently, reporting third-quarter 2024 NAREIT funds from operations (FFO) per share of $1.07, outpacing the Zacks Consensus Estimate of $1.04. The figure increased 4.9% from the prior-year quarter. Results reflected healthy leasing activity and a year-over-year improvement in the same property's net operating income (NOI) and base rents. The company raised its 2024 outlook.

Regency maintains a healthy balance sheet position, and as of Sept. 30, 2024, this retail REIT had nearly $1.5 billion of capacity under its revolving credit facility. As of the same date, its pro-rata net debt and preferred stock to operating EBITDAre was 5.2X. The company’s investment-grade credit ratings of A3 and BBB+ from Moody’s and S&P Global, respectively, render it access to the debt market at favorable costs. With low leverage, limited near-term maturities and a large pool of unencumbered assets, the company remains well-poised to meet its obligations and bank on growth scopes.

REG: In a Nutshell

With a solid operating model and a healthy financial position, we expect the latest dividend rate to be sustainable.

Over the past six months, shares of this Zacks Rank #2 (Buy) company have rallied 24.5%, outperforming the industry’s growth of 12.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.

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