Tags: Vornado | REIT | diversified | VNO

Vornado REIT Offers Diversified Exposure

By    |   Tuesday, 15 Nov 2011 03:56 PM

Vornado Realty Trust (VNO) is one of the largest real estate investment trusts (REITs) in the United States. The stock provides investors with investment exposure to a diversified commercial property portfolio.

Vornado Realty Trusts owns an integrated portfolio of commercial properties through its 93 percent owned Vornado Realty L.P. The company owns both office and retail properties, primarily in the New York City area and Washington, D.C. Real estate investment trusts such as Vornado must pay out a majority of earnings as dividends to shareholders. These stocks tend to offer some of the higher yields in the market.

REIT investors use a company's funds from operations (FFO) to determine the stability of the dividend and potential for future dividend increases. Through the first three quarters of 2011, Vornado reported adjusted FFO of $4.13 per share, up 1 cent from $4.12 for the same period of 2010.

Unadjusted FFO may fluctuate if the company sells properties during a quarter and books either profits or losses.

Dividend path

In the second quarter of 2009, Vornado reduced the previously rising dividend to 65 cents from 95 cents quarterly. The 65 cents level was maintained until the first quarter of 2011, when the payout was increased to 69 cents, a $2.66 annual rate.

The current yield for Vornado Realty is 3.3 percent. With a full year projected funds from operations of over $5 per share, the company has plenty of room to increase the dividend. It is possible the company will return to a policy of annual distribution increases.

VNO has under-performed the prominent REIT index by 15 percent over the last year. A boost in the distribution rate would have a positive impact on the share price.

UBS Securities recently reiterated its buy rating on Vornado but lowered the target price to the mid-$90s from over $100. Barclays Capital analysts have an overweight rating on the stock with a $99 target price.

The company next reports on Feb. 23.

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Vornado Realty Trust (VNO) is one of the largest real estate investment trusts (REITs) in the United States. The stock provides investors with investment exposure to a diversified commercial property portfolio. Vornado Realty Trusts owns an integrated portfolio of...
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2011-56-15
Tuesday, 15 Nov 2011 03:56 PM
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