Investors are always trying to predict what a stock will be worth in the future and how much its dividend is likely to grow over time. One of the best ways to do that is by looking at its history — in particular, the last five years. Five years is a good length of time in which to measure a stock’s overall performance because the markets have had both bull and bear runs within that time frame.
Take a look at one of the leading residential real estate investment trusts (REITs) and see how much you would be making in dividends today if you invested $10,000 in its shares five years ago:
Mid-America Apartment Communities Inc. (NYSE: MAA) is a Germantown, Tennessee-based residential REIT that specializes in owning and leasing apartment complexes. It owns over 100,000 units in 282 communities across 16 states and Washington, D.C. Most of Mid-America Apartment Communities’ properties are located in the Southeast, Southwest and Mid-Atlantic states.
Mid-America Apartment Communities has a capitalization of $18.2 billion. The 52-week closing range is $141.13 to $217.64, with the low coming in mid-October, 2022. Since then, it has risen about 10%, and its most recent closing price was $155.28.
If you had invested $10,000 in Mid-America Apartment Communities in January 2018, you would have received 107.23 shares at a price of $93.25. At the time, the quarterly dividend paid $0.923 per share.
Over the five-year period, Mid-America Apartment Communities has performed quite well. Its dividend has increased by 51% to $1.40 per share. The last dividend increase was by 12% this month, from $1.25 to $1.40 per share. Mid-America Apartment Communities also raised its dividend by almost 15% in May 2022, so it was somewhat surprising to see another hefty dividend increase this month. These were two of the largest dividend increases in Mid-America Apartment Communities’ history.
The total return on your five-year investment would have been $62.03 in appreciation and $20.79 in dividends for a total return of $82.82 per share, or 88.81%. Your starting investment of $10,000 would be worth $18,880.58 today.
If you chose to reinvest the dividends, your original 107.23 shares would have grown to 125.42 shares for a total return of 94.72%. The original $10,000 investment would now be worth $19,469.
Mid-America Apartment Communities has a record of 115 consecutive dividend payments. It has never cut its dividend over the past five years, even during the worst of the COVID-19 pandemic.
Mid-America Apartment Communities has forward funds from operations (FFO) of $8.41 and pays a $5.60 annual dividend, for a fairly safe payout ratio of 66.5%. The present dividend yield is 3.6%.
The irony of 2022, a year in which Mid-America Apartment Communities had a total return of negative 28.51%, is that it actually was growing its revenue and FFO because of the influx of tenants that moved from northern areas of the U.S. to the Sun Belt. Third-quarter revenue was 15% ahead of the third quarter of 2021, and FFO of $2.19 was $0.34 higher than the third quarter of 2021. That would suggest that, at its present price and given its generous dividend increases, Mid-America Apartment Communities could have plenty of upside in 2023.
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