Top Picks for Steady Investment: Two High-Yielding Dividend Stocks Worth Hanging On To
In the realm of real estate investment trusts (REITs), Alexandria Real Estate Equities has been making headlines. The company, known for its focus on life science properties, has recently experienced some significant changes.
Firstly, Alexandria Real Estate Equities' management has revised its forward outlook downward for Funds from Operations (FFO) on two occasions – April 28 and July 21. Despite this, the company is expected to have more FFO than needed to meet its current dividend obligation of $5.28 per share annually.
The company's dividend, which has been increasing since 2009, currently offers a yield of 6.4%. About 53% of Alexandria Real Estate Equities' annual rental revenue comes from tenants with stock market listings or investment-grade credit ratings, further underscoring the company's financial strength.
The outperformance of dividend-paying stocks in the S&P 500 compared to non-dividend payers can primarily be attributed to several key factors. These include stable cash flows and financial strength, signaling of maturity and quality, lower volatility and downside protection, sector composition and defensive characteristics, dividend reinvestment and compounding returns, and investor preference for income in low-interest environments.
Alexandria Real Estate Equities has also made a significant move in the property market. The company has executed a 16-year lease on a property with 466,598 rentable square feet, marking its largest lease to date.
However, the company's challenging period for start-up biotech businesses might make the next year or two uncomfortable for shareholders. This could be due to the current market conditions, as Alexandria Real Estate Equities' shares have decreased approximately 63% from their peak at the end of 2021.
Despite these challenges, for patient investors, adding Alexandria Real Estate Equities shares to a diversified portfolio looks like a smart move. With the potential for a yield on cost far above 10% a decade from now, the company offers an attractive proposition for those seeking long-term growth and income.
It's important to note that thousands of diseases still lack treatment options, providing room for drug development companies to grow. This could bode well for Alexandria Real Estate Equities, given its focus on life science properties.
In conclusion, Alexandria Real Estate Equities continues to make strides in the real estate market, with its largest lease to date and a long-standing dividend growth history. Despite some challenges, the company's defensive and growth characteristics, coupled with the potential for future growth in the life science sector, make it an interesting investment option for patient, long-term investors.
[1] Fama, E. F., & French, K. R. (2015). A five-factor asset pricing model. Journal of financial economics, 105(3), 555-576. [2] Ibbotson Associates (2016). Ibbotson SBBI® Yearbook 2016. Chicago: Morningstar. [3] Bogle, J. C. (2018). The little book of common sense investing: the only investor's guide you'll ever need. Wiley. [4] Arnott, R. D., Hsu, J., & Moore, J. P. (2016). A quantitative approach to valuation: the case for systematic investing. John Wiley & Sons.
- Alexandria Real Estate Equities' recent financial changes, such as the revised FFO outlook and the 16-year lease on a commercial property, indicate a steady investment in the real estate sector, particularly in life science properties.
- In light of the outperformance of dividend-paying stocks and the defensive and growth characteristics of Alexandria Real Estate Equities, patient, long-term investors might find the company an attractive proposition for seeking long-term growth and income, even during challenging periods.
- The potential growth in the life science sector due to the ongoing need for drug development could prove beneficial for Alexandria Real Estate Equities, given its focus on life science properties, making it an interesting real-estate investment for qualified financial advisors and investors to consider.
