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Camden: Residential Returns
02/13/2015 7:00 am EST
Helped by persistently low interest rates, real estate investment trusts have been among the best performing industry groups in 2015. This new recommendation is a REIT focused in the residential space, notes John Dobosz, editor of Forbes Dividend Investor.
Houston-based Camden Property Trust (CPT) is one of the biggest publicly-traded apartment REITs. As of January 31, 2015, Camden owned interests in and operated 167 properties containing 58,664 apartment units.
Its properties are higher-end residences located across the United States in ten states: Texas, Arizona, Colorado, California, Georgia, Florida, North Carolina, Virginia, and Maryland.
Camden shares are up more than 30% in the past year but down $4 from a 52-week high hit one week ago. Coinciding with a drop in the overall REIT market tracked by the Cohen & Steers Realty Majors (ICF), Camden’s shares sold off after the company reported fourth quarter and full-year 2014 results.
Based on funds from operations, which adds back depreciation and amortization expenses to earnings, Camden’s $0.99 per share for the fourth quarter fell short of analysts’ consensus $1.02 forecast.
However, revenue of $216.5 million exceeded the $215.8 million forecast. On a full-year basis, 2014 same-property net operating increased 4.9% compared to 2013.
One very nice bit of news in the release was a 6.1% dividend increase to $0.70 per quarter. Camden has paid dividends every quarter since October 1993, but it did slash the payout from $0.70 to $0.45 in June 2009 in the wake of the financial crisis.
It’s steadily risen back to its old level, currently good for a 3.65% yield. The ex-dividend date for the $0.70 dividend is March 27.
Based on historical valuations, Camden looks cheaply priced. Its price to sales ratio would need to grow 9% to get back to its five-year average.
Its enterprise value dividend by expected 2015 EBITDA of 14.7 is 22% lower than the five-year average of this ratio. For these discounted valuations, along with the rising dividend payouts, Camden is worth buying at current prices.
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