This Office Landlord Shines Across Growing Sunbelt With 7.8% Dividend Yield

Highwood Properties (HIW) stands out as a top dividend stock, offering investors an impressive 7.8% yield despite being in a risky industry.

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Headquartered in Raleigh, N.C., Highwood Properties operates as a real estate investment trust (REIT) specializing in commercial real estate. The company primarily leases office properties in the growing Sunbelt region. Its biggest operations are in Atlanta, Nashville, N.C., and the North Carolina cities of Charlotte and Raleigh.

Along with other commercial REITs, Highwood struggled amid the Covid pandemic as offices shut down and employees transitioned to remote work. However, the company has managed to report solid financial results.

In its most recent first-quarter report on April 23, Highwood recorded funds from operations (FFO) of 89 cents per share, in line with analyst estimates. Revenue of $211.2 million surpassed analyst expectations. Additionally, the company updated its FFO expectations for 2024 to be between $3.46 and $3.61 per share.

Many employees remain on hybrid work schedules. But there is a growing push from employers to bring workers back into the office on a full-time basis. In some cases by the end of 2024. While it remains to be seen how many of those workers ultimately do return, fuller occupancy at offices is a much needed benefit for the sector.

Dividend Stock Offers Stability, Solid Financials

With an annualized dividend yield of 7.8%, Highwood Properties offers a top-tier dividend.

Although the dividend has not increased every year, it has remained stable. The company is well capitalized, enabling it to avoid dividend cuts during both the Covid pandemic and the 2008 financial crisis.

Highwood will pay its next quarterly dividend, of 50 cents per share, on June 11 to shareholders as of May 20.

In terms of debt, S&P has given Highwood an investment grade rating of BBB. Recently, the company continued to bolster its finances by selling nearly $80 million of noncore properties in the first four months of this year.

Shares of the dividend stock are rebounding off their 10-week moving average after breaking out of a flat base. It topped a 24.40 buy point earlier this year.

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