Agree Realty: A Top Dividend Stock with 5% Yield and Diversified Tenants

Agree Realty Corporation offers a 5.04% dividend yield and a diversified portfolio across 49 states, with a strong tenant base including Walmart and CVS. The company's financial performance is expected to grow, with a 2.43% increase in earnings per share and a reasonable valuation based on its assets and liabilities.

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Bijay Laxmi
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Agree Realty: A Top Dividend Stock with 5% Yield and Diversified Tenants

Agree Realty: A Top Dividend Stock with 5% Yield and Diversified Tenants

Agree Realty Corporation (NYSE: ADC), a publicly traded real estate investment trust (REIT), has emerged as a compelling investment opportunity for income-seeking investors. The company boasts a generous 5.04% dividend yield, placing it in the top 25 of all dividend-paying stocks. With a diversified portfolio spanning 49 states and a tenant base that includes industry-leading retailers, Agree Realty offers an attractive combination of steady income and growth potential.

Why this matters: The performance of REITs like Agree Realty can have a significant impact on the overall health of the stock market and the economy, as they provide a vital source of income for investors. Additionally, the success of Agree Realty's diversified portfolio can serve as a model for other companies seeking to mitigate risks and ensure steady growth.

One of the key strengths of Agree Realty lies in its impressive tenant roster. The company's properties are leased to well-known, omni-channel retailers such as Walmart, Tractor Supply, and CVS. These industry leaders provide a stable and reliable source of rental income for Agree Realty, mitigating the risks associated with tenant turnover and default. The diversification across multiple states and sectors further enhances the company's resilience in the face of economic uncertainties.

Agree Realty's financial performance has been equally impressive. The company's earnings are expected to grow by 2.43% in the coming year, from $4.11 to $4.21 per share. While the current P/E ratio of 35.38 may seem high, it is still less expensive than the market average of 134.15 and the finance sector average of 48.01. The company's PEG ratio of 2.73 suggests a potential overvaluation, but its P/B ratio of 1.21 indicates a reasonable valuation based on its assets and liabilities.

Income investors will be particularly attracted to Agree Realty's monthly dividend of $0.25 per share, which translates to a 3.00% annualized dividend and a 4.99% dividend yield. While the current dividend payout ratio of 176.47 may raise concerns about sustainability, it is expected to decrease to a more manageable 71.26 next year. The company has been increasing its dividend for the past two years, demonstrating its commitment to rewarding shareholders.

Agree Realty's portfolio consists of 2,135 properties located across 49 states, encompassing approximately 44.2 million square feet of gross leasable area. This extensive geographic footprint provides a hedge against regional economic downturns and ensures a steady stream of rental income. Over the past decade, the company has achieved an impressive 102.5% growth in its funds from operations (FFO) per share, showcasing its ability to effectively manage and grow its portfolio.

Institutional investors have taken notice of Agree Realty's strong fundamentals and growth prospects, with 97.83% of the company's stock held by institutions. This high level of institutional ownership indicates a strong vote of confidence in the company's management and future prospects. Insiders also hold a 1.80% stake in the company, aligning their interests with those of shareholders.

Agree Realty's next quarterly earnings announcement is scheduled for Tuesday, August 6th, 2024. Investors will be closely watching the company's financial results and any updates on its growth strategies. With a consensus rating of "Moderate Buy" from 9 Wall Street analysts, Agree Realty appears well-positioned to continue delivering attractive returns to its shareholders in the years ahead.

Key Takeaways

  • Agree Realty offers a 5.04% dividend yield, ranking it in the top 25 of dividend-paying stocks.
  • The company's diversified portfolio spans 49 states and features industry-leading retailers as tenants.
  • Earnings are expected to grow 2.43% in the coming year, with a reasonable P/B ratio of 1.21.
  • The company has a strong track record of increasing dividends and has a high level of institutional ownership (97.83%).
  • Agree Realty's next quarterly earnings announcement is scheduled for August 6th, 2024, with a consensus rating of "Moderate Buy".