June 12, 2025 a 11:31 am
EQR: Dividend Analysis - Equity Residential
Equity Residential, a leader in the residential REIT sector, offers a stable dividend history of 33 years. Despite recent slight decreases in dividend growth rates, its consistent dividend yield provides investors with a reliable income stream. However, its payout ratios suggest caution for long-term sustainability.
📊 Overview
Equity Residential operates primarily in the Residential REIT sector, providing investors with a current dividend yield of 3.80%. With a dividend history spanning 33 years, it demonstrates a strong commitment to returning funds to shareholders. Most notably, it has avoided any cuts or suspension in recent history, reflecting prudent financial management.
| Financial Metric | Value |
|---|---|
| Sector | Residential REIT |
| Dividend yield | 3.80% |
| Current dividend per share | 2.70 USD |
| Dividend history | 33 years |
| Last cut or suspension | None |
📉 Dividend History
The robustness of Equity Residential's dividend history is crucial for investors seeking steady income. With a 33-year track record of dividend distribution, it showcases resilience and a steadfast approach to shareholder returns. Historical dividend performance can highlight both reliability and long-term profitability.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 1.3675 |
| 2024 | 2.025 |
| 2023 | 2.6500 |
| 2022 | 2.500 |
| 2021 | 2.4100 |
📈 Dividend Growth
Analysing the dividend growth rates over recent years reveals a nuanced picture of the company's strategic financial decisions. The slight negative growth rate over 5 years might still be seen as capable in providing modest returns in combination with asset appreciation.
| Time | Growth |
|---|---|
| 3 years | -5.64% |
| 5 years | -2.26% |
The average dividend growth is -2.26% over 5 years. This shows moderate but steady dividend retraction which reflects the broader economic conditions.
🗣️ Payout Ratio
An investor should be aware of the payout ratio as it indicates whether a company can sustain its dividend payments. A high EPS-based payout ratio of 102.60% suggests dividends exceed earnings, while an FCF-based ratio of 80.68% reflects better cash flow management, though it remains high.
| Key figure ratio | Value |
|---|---|
| EPS-based | 102.60% |
| Free cash flow-based | 80.68% |
An EPS payout ratio above 100% indicates potential unsustainability unless offset by the cash flow ratio, which is slightly more conservative at 80.68%.
💸 Cashflow & Capital Efficiency
Understanding the cash flow profile and capital efficiency is paramount to gauge the firm’s financial vitality. Evaluating metrics such as Free Cash Flow Yield, Earnings Yield, CAPEX to Operating Cash Flow are vital for understanding cash generation and resource allocation.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Free Cash Flow Yield | 5.51% | 5.18% | 4.62% |
| Earnings Yield | 3.50% | 3.61% | 3.81% |
| CAPEX to Operating Cash Flow | 15.96% | 21.76% | 20.25% |
| Stock-based Compensation to Revenue | 1.08% | 1.11% | 1.05% |
| Free Cash Flow / Operating Cash Flow Ratio | 84.04% | 78.24% | 79.75% |
The cash flow indicators reflect capital efficiency and operational scalability, though moderating growth trends imply tighter cash availability.
💼 Balance Sheet & Leverage Analysis
A comprehensive analysis of balance sheet metrics illustrates the indebtedness and liquidity position of the company. Metrics such as Debt-to-Equity and Net Debt to EBITDA are critical for assessing financial soundness.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Debt-to-Equity | 69.22% | 69.48% | 76.30% |
| Debt-to-Assets | 38.25% | 38.44% | 40.45% |
| Debt-to-Capital | 40.91% | 40.99% | 43.28% |
| Net Debt to EBITDA | 4.50 | 4.30 | 3.36 |
| Current Ratio | 0.26 | 0.17 | 0.16 |
| Quick Ratio | 0.26 | 0.17 | 0.16 |
| Financial Leverage | 1.81 | 1.81 | 1.89 |
Evaluated debt metrics suggest a cautious debt management stance, with manageable leverage levels contributing positively to the company's financial strategy.
📈 Fundamental Strength & Profitability
Key metrics such as Return on Equity and margins reveal insights into operational efficiency and profitability, critical for long-term value creation.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Return on Equity | 6.95% | 7.54% | 9.38% |
| Return on Assets | 3.84% | 4.17% | 4.97% |
| Margins: Net | 28.40% | 29.07% | 34.76% |
| Margins: EBIT | 40.06% | 39.83% | 45.87% |
| Margins: EBITDA | 62.37% | 61.92% | 83.43% |
| Margins: Gross | 64.08% | 63.59% | 63.27% |
| R&D to Revenue | 0.00% | 0.00% | 0.00% |
The metrics indicate increasing returns and operational margins, portraying robust profitability and effective resource management.
🔍 Price Development
⭐ Dividend Scoring System
Our custom scoring highlights the strengths and challenges in various critical financial aspects.
| Category | Score | Score Bar |
|---|---|---|
| Dividend yield | 4 | |
| Dividend Stability | 5 | |
| Dividend growth | 2 | |
| Payout ratio | 3 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 3 | |
| Balance Sheet Quality | 4 |
Total Score: 30/40
✅ Rating
Equity Residential presents a solid dividend profile with historical stability and impressive financial resilience. However, high payout ratios and declining dividend growth need monitoring. It remains an attractive choice for income-focused investors with a moderate risk tolerance.