Federal Realty Investment Trust (FRT) is a retail REIT that owns 103 properties spanning 28.8 million commercial square feet, with roughly 3,700 tenants. The portfolio is primarily retail-based, while the remainder includes roughly 2,500 residential units and office properties, observes Ben Reynolds, editor of Sure Dividend High Yield Newsletter.
With 59 consecutive years of dividend growth, FRT is the only REIT on the Dividend Kings list. Federal Realty has a market capitalization of about $10 billion.
On July 31, Federal Realty reported its Q2 results. Total revenue increased 7.8% year-over-year to $335.7 million. Recent acquisitions, along with higher rental income from the comparable portfolio, were the main drivers of this top-line growth. Core funds from operations (FFO) per share grew 6.8% to $1.88.
Federal Realty has increased its dividend for 59 consecutive years, earning itself Dividend King status. The impressive dividend growth streak reflects the REIT’s strong business model, resilience during recessions, and high-quality management. With a projected 2026 payout ratio of 62% and a solid business model, we view the dividend as very safe and expect the company to extend its growth streak.
The REIT trades at 15.3 times projected AFFO per share, below our fair value estimate of 17. This implies the potential for a 2.1% annualized valuation tailwind over the next five years. Given the 4% dividend yield and expected 5% annual AFFO per share growth, we anticipate annualized total returns of 10.3% over the next five years.
Recommended Action: Buy FRT.
