Assessing the Sustainability of Highwoods Properties Inc's Upcoming Dividend
Highwoods Properties Inc (HIW, Financial) recently announced a dividend of $0.5 per share, payable on 2023-12-12, with the ex-dividend date set for 2023-11-17. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Highwoods Properties Inc's dividend performance and assess its sustainability.
What Does Highwoods Properties Inc Do?
Highwoods Properties Inc is a real estate investment trust engaged in the acquisition, ownership, management, and leasing of properties in urban areas throughout the Southern United States. In terms of total square footage, the vast majority of the company's real estate portfolio comprises office buildings. Highwoods Properties derives nearly all of its income in the form of rental revenue from the tenants of its buildings. The majority of this revenue comes from its holdings in the urban markets of Atlanta, Raleigh, Nashville, and Tampa. These cities also account for the majority of the square footage under the company's ownership. Highwoods Properties' largest customers include the U.S. Government, financial services firms, industrial supply retailers, and healthcare companies.
A Glimpse at Highwoods Properties Inc's Dividend History
Highwoods Properties Inc has maintained a consistent dividend payment record since 1994. Dividends are currently distributed on a quarterly basis. Highwoods Properties Inc has increased its dividend each year since 2004. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 19 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Highwoods Properties Inc's Dividend Yield and Growth
As of today, Highwoods Properties Inc currently has a 12-month trailing dividend yield of 10.62% and a 12-month forward dividend yield of 10.62%. This suggests an expectation of same dividend payments over the next 12 months. Over the past three years, Highwoods Properties Inc's annual dividend growth rate was 1.70%. Extended to a five-year horizon, this rate increased to 2.40% per year. And over the past decade, Highwoods Properties Inc's annual dividends per share growth rate stands at 1.90%. Based on Highwoods Properties Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Highwoods Properties Inc stock as of today is approximately 11.96%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Highwoods Properties Inc's dividend payout ratio is 1.55, which may suggest that the company's dividend may not be sustainable. Highwoods Properties Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Highwoods Properties Inc's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Highwoods Properties Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Highwoods Properties Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Highwoods Properties Inc's revenue has increased by approximately 3.70% per year on average, a rate that outperforms approximately 63.15% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Highwoods Properties Inc's earnings increased by approximately 6.50% per year on average, a rate that outperforms approximately 59.32% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 1.90%, which outperforms approximately 51.11% of global competitors.
Engaging Conclusion: Highwoods Properties Inc's Dividend Prospects
In conclusion, Highwoods Properties Inc's commitment to consistent dividend payments, coupled with a solid track record of growth, presents an appealing case for dividend-seeking investors. However, the high payout ratio warrants a cautious approach, as it may indicate a potential challenge to the sustainability of future dividends. With a strong profitability rank and positive growth metrics, Highwoods Properties Inc appears well-positioned to continue its dividend payments, but investors should keep an eye on these financial health indicators. Will Highwoods Properties Inc's strategic positioning in the Southern U.S. urban markets and its ability to maintain financial stability allow it to continue its history of dividend growth? This is a question value investors should ponder as they consider adding HIW to their portfolios.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
