July 03, 2025 a 12:46 pm
ESS: Dividend Analysis - Essex Property Trust, Inc.
Essex Property Trust, Inc. (ESS) is a recognized player in the real estate investment trust sector, primarily focusing on multifamily properties. Despite recent challenges resulting in a dividend cut, the company boasts a long history of dividend payments, showcasing its commitment to shareholder returns. The current dividend yield remains attractive, although growth has been stagnant in recent years.
Overview
Essex Property Trust operates in the Real Estate sector with a notable dividend yield of 3.54%. Currently, the dividend per share stands at $9.66, supported by an impressive 32-year history of dividend payments. However, it faced a dividend cut recently in 2024, highlighting a potential area of concern for income-focused investors.
| Parameter | Details |
|---|---|
| Sector | Real Estate |
| Dividend yield | 3.54% |
| Current dividend per share | 9.66 USD |
| Dividend history | 32 years |
| Last cut or suspension | 2024 |
Dividend History
Understanding the dividend history provides insight into the reliability and consistency of payments. Essex Property Trust has maintained its dividend payouts over several decades, a strong indicator of financial stability and a commitment to shareholder value, despite the recent adjustment.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 7.59 |
| 2024 | 7.35 |
| 2023 | 9.24 |
| 2022 | 8.80 |
| 2021 | 8.36 |
Dividend Growth
The dividend growth analysis reveals a challenging period for Essex Property Trust with a 3-year growth of -4.2% and a 5-year growth of -1.18%. Despite these figures indicating a contraction, the historical resilience of dividends offers a potential for recovery once market conditions stabilize.
| Time | Growth |
|---|---|
| 3 years | -4.20% |
| 5 years | -1.18% |
The average dividend growth is -1.18% over 5 years. This shows moderate but steady dividend growth.
Payout Ratio
Payout ratios are crucial in understanding the dividend sustainability. Essex's EPS-based payout is relatively high at 92.47%, while its free cash flow-based payout sits at a comfortable 67.25%. The high EPS payout ratio suggests a tighter margin for sustaining dividends, especially under earnings pressure.
| Key figure | Ratio |
|---|---|
| EPS-based | 92.47% |
| Free cash flow-based | 67.25% |
Cashflow & Capital Efficiency
Cashflow metrics demonstrate Essex's ability to generate and manage capital efficiently. However, with a free cash flow yield of 4.95% and earnings yield of 3.69%, the company maintains a lower yield relative to industry norms, indicating potential avenues for improvement in cost management and operational efficiency.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 5.08% | 5.27% | 5.89% |
| Earnings Yield | 4.04% | 2.55% | 2.96% |
| CAPEX to Operating Cash Flow | 10.63% | 14.32% | 16.73% |
| Stock-based Compensation to Revenue | 0.41% | 0% | 0.45% |
| Free Cash Flow / Operating Cash Flow Ratio | 87.23% | 85.68% | 83.27% |
Balance Sheet & Leverage Analysis
The balance sheet evaluation provides insights into financial stability and leverage levels. Essex's debt-to-equity ratio shows moderate leverage at 1.20, while the quick ratio of 0.66 reflects the company's capability to meet short-term liabilities.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 1.20 | 1.16 | 1.05 |
| Debt-to-Assets | 51.47% | 50.73% | 48.71% |
| Debt-to-Capital | 54.58% | 53.63% | 51.32% |
| Net Debt to EBITDA | 4.56 | 3.94 | 5.31 |
| Current Ratio | 1.01 | 0.59 | 4.96 |
| Quick Ratio | 0.66 | 0.59 | 5.14 |
| Financial Leverage | 2.33 | 2.28 | 2.16 |
Fundamental Strength & Profitability
Key profitability metrics such as return on equity (ROE) and return on assets (ROA) are critical indicators of efficiency and management effectiveness. Essex's performance in these areas, including margins, underscores a fundamentally strong but potentially optimized business model.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 12.20% | 7.48% | 7.14% |
| Return on Assets | 5.10% | 3.28% | 3.30% |
| Net Margin | 41.79% | 24.31% | 25.41% |
| EBIT Margin | 58.99% | 56.50% | 58.51% |
| EBITDA Margin | 91.69% | 89.36% | 70.20% |
| Gross Margin | 68.00% | 68.14% | 68.39% |
| Research & Development to Revenue | 0% | 0% | 0.00% |
Price Development
Dividend Scoring System
| Criteria | Score (1-5) | Score Bar |
|---|---|---|
| Dividend yield | 4 | |
| Dividend Stability | 4 | |
| Dividend growth | 2 | |
| Payout ratio | 3 | |
| Financial stability | 3 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 3 |
Total Score: 28/40
Rating
Overall, Essex Property Trust demonstrates a strong dividend profile supported by a robust history, albeit recent performance indicates a need for operational adjustments to sustain growth and profitability. For income-focused investors, Essex remains a viable option, considering its resilience but with caution regarding recent dividend adjustments.