We recently compiled a list of the Dividend Kings List: Top 15.In this article, we are going to take a look at where Federal Realty Investment Trust (NYSE:FRT) stands against the other dividend kings you should know about.
Dividend Kings are a distinguished group of companies that have achieved at least 50 consecutive years of dividend increases. While some of these companies are part of the S&P index, the two categories are not entirely overlapping. The appeal of Dividend Kings became especially clear after the disruptions caused by the COVID-19 pandemic in 2020. During this time, numerous companies either reduced or suspended their dividends, leaving income-focused investors disappointed. Many had assumed that dividend-paying stocks were inherently lower risk, only to face steep share price drops alongside payout cuts. However, Dividend Kings stand out for their remarkable consistency, boasting 50 years of uninterrupted dividend increases. This long history of reliable payouts provides a sense of stability, even in volatile market conditions.
Investors often gravitate toward firms with a track record of consistent dividend growth, as such companies tend to perform well in declining or stagnant markets. Even during periods of strong market performance, dividend growers have captured a significant share of the gains. Following a long-term dividend growth strategy can aid in compounding returns for investors. A T. Rowe Price report highlighted that, between 1985 and 2022, companies in the Russell index that consistently increased dividends outperformed the broader benchmark. Furthermore, these companies exhibited lower price volatility compared to the overall market.
Earning income through dividend stocks is a gradual process that requires patience and a commitment to long-term investing. These stocks are particularly suited for investors with a long-term horizon, as they have consistently outpaced inflation over time. According to data from Morningstar and Yale University's Robert Shiller, since 1871, the market’s dividends per share have grown at an annualized rate 1.6 percentage points higher than inflation. Moreover, the gap between dividend growth and inflation has widened in recent years. Over the past 50 years, dividends have outpaced inflation by 2.5 percentage points annually, and in the last 20 years, the margin has grown to 4.6 percentage points per year.
During market rallies, dividend-growing stocks may underperform as investor enthusiasm and momentum often take precedence over fundamentals such as valuation and business quality. This trend has been especially noticeable in the recent past, with dividend stocks lagging behind the broader market. Nonetheless, maintaining a long-term strategy centered on dividend growth can be advantageous, as the benefits accumulate over time with each increase in payouts. Companies with solid fundamentals and robust financial stability are typically well-positioned to sustain and grow their dividends. In contrast, smaller or emerging businesses often prioritize reinvesting earnings into their operations to fuel growth. Given this, we will take a look at some of the best dividend kings with the highest yields.
Our Methodology:
To create this list, we examined a set of over 50 dividend king companies, recognized for consistently increasing dividends for 50 years or more. From this group, we selected companies with the highest dividend yields as of December 3 and organized them in ascending order based on their yield, from lowest to highest. We also measured hedge fund sentiment around each stock according to Insider Monkey’s database of 900 as of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A wide-angle view of an urban skyline, representing the company's investments in urban neighborhoods.
Federal Realty Investment Trust (NYSE:FRT) is a real estate investment trust company, based in Maryland, US. The company mainly invests in shopping centers and other entertainment properties. Currently, the company pays a quarterly dividend of $1.10 per share and has a dividend yield of 3.85%, as of December 3. Its dividend growth streak spans over 56 years, which makes FRT one of the best dividend kings on our list. The stock is popular among investors because of its long dividend growth history and attractive yield.
Operating as a typical REIT, Federal Realty Investment Trust (NYSE:FRT) distinguishes itself with a unique approach. Instead of focusing on a large property portfolio, it emphasizes quality. By September 2024, it owned just 102 properties, all situated in highly sought-after areas. Federal Realty strategically acquires properties in major metropolitan regions with dense populations and high-income demographics. This strategy has been advantageous, particularly during the pandemic, when it attracted tenants relocating from nearby locations to occupy spaces in its premium sites, avoiding the occupancy struggles faced by many others. The stock has surged by nearly 9% since the start of 2024.
Federal Realty Investment Trust (NYSE:FRT) posted third-quarter 2024 revenue of $303.3 million, reflecting a 6% increase compared to the same period last year and exceeding analysts' expectations by $1.85 million. The company finalized 126 leases for 580,977 square feet of comparable retail space, resulting in a 14% rise in cash-based rents and a 26% increase on a straight-line basis. Net income available to common shareholders grew to $58.9 million, up from $55 million in the previous year.
Federal Realty Investment Trust (NYSE:FRT) was included in 36 hedge fund portfolios at the end of Q3 2024, growing from 24 in the previous quarter, according to Insider Monkey's database. The stakes held by these hedge funds have a collective value of nearly $302 million.
Overall FRT ranks 5th on our list of the dividend kings you should know about. While we acknowledge the potential of FRT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FRT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
