Essex Property Trust’s ESS board of directors has approved a 4.9% hike in the annual cash dividend for its common stock. ESS will now pay out a first-quarter cash dividend of $2.57 per share, up from $2.45 paid in the prior quarter. This marks the company’s 31^st consecutive annual dividend increment.

The increased amount will be paid out on April 15 to shareholders on record as of March 31, 2025. Based on the increased rate, the annual dividend comes to $10.28 a share, resulting in an annualized yield of 3.5%, considering ESS’ closing price of $294.41 on Feb. 20.

Solid dividend payouts are the biggest enticements for REIT investors, and ESS is committed to boosting its shareholder wealth. The company has increased its dividend five times in the last five years, which is encouraging. Check out Essex Property Trust’s dividend history here.

ESS’ Fundamentals & Financial Performance Support Dividend Payout

Essex Property’s substantial exposure to the West Coast market offers ample scope to enhance its top line. The West Coast is home to several innovation and technology companies that drive job creation and income growth. With layoffs in the tech industry slowing and return to office gaining momentum, the West Coast markets are likely to see an increase in renter demand in the near term.

Also, due to the high cost of homeownership, the transition from renter to homeowner is difficult in its markets, making renting apartment units a more flexible and viable option.

The company’s efforts to leverage technology, scale and organizational capabilities are expected to drive margin expansion and bring operational efficiency across its portfolio. Its strategic portfolio-rebalancing efforts will aid future growth. A healthy balance sheet also augurs well.

This month, Essex Property reported a decent fourth-quarter 2024 earnings performance. Its funds for operations per share of $3.92 beat the Zacks Consensus Estimate of $3.90. The figure also improved 2.3% from the year-ago quarter. Results reflected favorable growth in same-property revenues and net operating income.

Hence, with solid fundamentals and earnings performance, we expect the latest dividend rate to be sustainable in the long run.

Shares of this Zacks Rank #3 (Hold) company have rallied 25.4% over the past year, outperforming the industry’s growth of 11.9%.

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Stocks to Consider

Some better-ranked stocks from the broader REIT sector are SL Green Realty SLG and Welltower WELL, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for SL Green Realty’s 2025 FFO per share is pegged at $5.52, suggesting year-over-year growth of 9.7%.

The Zacks Consensus Estimate for Welltower’s 2025 FFO per share stands at $4.86, indicating an increase of 12.5% from the year-ago reported figure.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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