Friday File: Portfolio Hodgepodge — One New Speculation, an Add-on Buy, and Check-ins on Some Dividend Growth stocks and Altius

Latest news and thoughts from the Real Money Portfolio

CoreSite (COR) announced their latest dividend increase this week, which I’ve been anticipating — would they continue to be a rapid dividend growth REIT and keep investors excited, or will the slowing of the dividend growth continue to make me more cautious about the valuation of this highflier?

Well, it turns out that the dividend increase was “just enough” to be OK. It was far smaller than the year ago increase, just as the December dividend increase was far smaller, but the total of the two increases now gives us a dividend that is about 14% higher than it was a year ago (a year ago the quarterly dividend was raised to 90 cents, today it was raised to $1.03, after having been hiked to 98 cents in December). That’s not bad, and would be fantastic for many stocks, but it’s pretty humdrum by COR standards after years of 25%, 30%, even 50% dividend increases as they combined a strong core business (data centers) with a little bit of organic per-share growth and a lot of new debt.

So now they will be paying a dividend that annualizes out to $4.12, so the forward yield will be almost exactly 4%. Yields for income stocks in general have come up recently as the stocks have mostly come down from their highs, mostly from fear of the impact of rising interest rates (which tend to at least temporarily depress higher-dividend stocks, though it’s not as clear and obvious a relationship as the knee-jerk reaction would have you believe).

I was curious about how unusual this is, so I did a quick screen — I looked for stocks with market caps above a billion dollars that have been able to raise their dividend by a minimum of 20% a year, on average, for the past five years, have a trailing dividend yield of more than 3.5%, and a most recent dividend increase of at least 13%. It’s a short list, CoreSite is there, of course, as is one other REIT, the self-storage company CubeSmart, and one other real estate company, Kennedy-Wilson (KW), which is also in the Real Money Portfolio now, but there are only ten others… a few global banks (Woori and Bradesco), a couple utility-like companies, a couple asset managers (Blackstone and Apollo). Here’s the list, in case you’re curious:

So CoreSite is still in pretty rarefied air, ...

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