CubeSmart (CUBE) Increases Dividend By 6.7% On Solid Cash Flow
Zacks Investment Research | Dec 14, 2018 12:21AM ET
Ushering in good news for its shareholders, self-storage REIT CubeSmart (NYSE:CUBE) announced a 6.7% hike in the company’s quarterly dividend rate to 32 cents from 30 cents paid earlier. The company will pay the raised dividend for the fourth quarter on Jan 15, 2019, to shareholders on record as of Jan 2, 2019.
Based on the new rate, the annualized dividend rate comes to $1.28 per share, up from the prior annual rate of $1.20 per share, leading to an annualized yield of 4.07%, considering CubeSmart's closing price of $31.44 on Dec 13.
Solid dividend payouts remain the biggest enticement for REIT investors and CubeSmart remains committed toward boosting shareholder wealth. The latest hike reflects the company’s ability to generate solid cash flow growth through its operating platform and high quality portfolio.
The company’s annual dividend per share has grown at a CAGR of 24.6% during 2013-2017. This has been supported by steady growth in its funds from operations (FFO) per share as adjusted, which exhibited a CAGR of 15% during the same period. With a conservative payout ratio, the dividend is likely to be sustainable.
This Zacks Rank #3 (Hold) company remains well poised to capitalize on the industry’s encouraging prospects and benefit shareholders accordingly. It enjoys a solid operating performance and continues to focus on improving its presence in top markets with favorable demographics and attractive returns.
Moreover, fragmented ownership in the self-storage industry offers scope for consolidation activities. It also adheres to a conservative balance-sheet management. In fact, the company enjoys an investment grade balance sheet and access to wide range of capital sources. Also, reflecting optimal utilization of equity, CubeSmart’s ROE is 9.3%, higher than the industry average of 5.3%.
However, many of the markets are witnessing an escalating supply of new self-storage space, and this is anticipated to fuel competition. Rate hike adds to its woes. Nevertheless, in the past month, CubeSmart has been witnessing estimate revisions, suggesting increasing optimism in the firm’s prospects for both the short and long terms.
Shares of CubeSmart have outperformed the Zacks Investment Research
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