One Liberty Properties Delivers Six Consecutive Annual Dividend Hikes, 6.4% Dividend Yield (NYSE:OLP)

After a significant cut in the aftermath of the 2008 financial crisis, One Liberty Properties, Inc. (NYSE:OLP) began a streak of steady annual dividend hikes and has boosted its annual dividend payout amount in eight out of the last nine years.

After failing to boost its annual dividend in 2012, the company has delivered six consecutive annual dividend hikes. In addition to rewarding its shareholders with annual dividend hikes almost every year for nearly a decade, the company’s current dividend yield of 6.4% is significantly higher than industry averages. Furthermore, the company managed to maintain a high dividend yield despite increasing its share price at a faster pace than its annual dividend hikes.

While trading at the same level as it did one year ago, the company’s share price fluctuation is in line with its long-term volatility. Despite higher-than-average volatility, the share price has delivered a relatively steady uptrend for long-term shareholders. The share price was devastated during the 2008 financial crisis. Between its peak level in January 2017 and its all-time low in March 2019, the share price lost more than 90% of its value.

However, after bottoming out in the aftermath of the financial crisis, the share reversed direction and embarked on a steep recovery uptrend. In just one year, the share price recovered more than half of its losses. Continuing its uptrend, the share price regained all its losses since January 2017 and reached a new all-time high by mid-2013. While continuing to fluctuate, the share price maintained its uptrend and despite moderate volatility, continued to rise and set a new all-time high in 2019.

Investors interested in collecting robust income payouts with the added benefit of long-term asset appreciation should conduct their own analysis to confirm this stock’s compatibility with their own investment portfolio goals. However, to collect the next round of dividends that One Liberty Properties will distribute on the October 10, 2019, pay date, investors must claim stock ownership before the September 24, 2019, ex-dividend date.

One Liberty Properties, Inc. (NYSE:OLP)

Headquartered in Great Neck, New York, and founded in 1982, One Liberty Properties is a self-administered and self-managed real estate investment trust (REIT) that acquires, owns and manages a diversified portfolio consisting primarily of industrial, health and fitness, retail, restaurant and theater properties. As of May 2019, the company’s properties portfolio comprised of 123 properties in 30 states, with a total leasable space of more than 10.4 million square feet. Industrial properties account for the largest share of company’s contractual retail income (45%), with retail properties contributing another 22%. Restaurants, health & fitness and theaters contributed less than 5% share of rent income each and other types of properties accounted for less than 5%. The company’s largest customer in terms of contract retail revenue — Haverty Furniture Companies, Inc (NYSE:HVT) — contributed just 6.8% of revenue. Also, the company’s top five tenants account for just 22% of the company’s total revenue, which indicates diversification and reduced risk from extreme revenue fluctuations.

Dividends

The most recent of the company’s annual dividend hikes raised the dividend payout amount 4.7% from $0.43 to the current $0.45 quarterly distribution. This new amount is equivalent to a $1.80 annualized distribution and a 6.44% dividend yield. Even with a string of consecutive annual dividend hikes, the dividend payouts still rose slower than the company’s share price. Therefore, the current 6.44% dividend yield is nearly 5% below the company’s own 6.76% yield average over the past five years.

While trailing the company’s five-year average, One Liberty Properties’ current yield is nearly 130% higher than the 2.81% simple average yield of the entire Financial sector. Even within the Real Estate Development industry segment, which has significantly higher yield averages, One Liberty Properties’ current yield is still more than twice the segments current 3.15% yield average. Furthermore, even excluding companies that do not pay any dividends from the average yield calculation raises the segments average yield to only 4.59%. Therefore, One Liberty Properties’ current yield is still more than 40% above the segments average of only dividend-paying equities.

Over the most recent six annual dividend hikes, One Liberty Properties enhanced its annual dividend 36%, which is equivalent to an average growth rate of 5.3% per year. Additionally, since cutting its annual dividend amount more than 40% in 2009, the company has more than doubled its annual distribution. That level of growth corresponds to an average annual growth rate of 7.4% over the past decade.

Share Price

While growing more than ten-fold since its all-time low in March 2009, the share price has experienced some fluctuations over the trailing 12 months. The overall market decline in the last-quarter 2018 pushed down the One Liberty Properties’ share price. One Liberty Properties’ share price dropped 17% from the beginning of the trailing 12-month period in mid-September 2018 to the 52-week low of $23.40 on January 2, 2019.

After bottoming out at the beginning of the year, the share price reversed direction and recovered its fourth-quarter 2018 losses by mid-March 2018. The share price continued its uptrend to reach several new all-time highs in June. On June 20, 2019, the share price hit its most recent all-time high of $31.38 for a gain of more than 34% above the 52-week low from the beginning of the year.

Since spiking to its peak in mid-June, the share price pulled back 10% to its long-term uptrend level and closed on September 11, 2019, at $27.97. While in line with its level from one year earlier, the Sept. 11 closing price was nearly 20% higher than the January low and more than 30% higher than it was five years ago.

Driven by the strong dividend payouts, the company delivered a total return of nearly 6% over the past 12 months. Long-term returns were significantly better at 41% for the last three years and 73% over the five-year period.

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