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UDR (UDR) owns more than 40,000 apartment homes spread across the country. California, Washington, D.C., and Florida make up the lion's share of UDR's business, contributing close to 70% of net income. Two of those markets (California and Florida) got hit particularly hard by the housing market collapse in 2008, resulting in increased demand for rental units. The other, D.C., has perennially high rental demand.
UDR's status as a REIT means that the firm was essentially designed to generate income for its shareholders: the company is legally obligated to pay out the vast majority of income in the form of dividends. One key difference between this and other REITs is UDR's multifamily housing exposure. Unlike commercial REITs, which can enter into extremely long-term leases, housing is considerably less sticky and comes with protections tipped in the favor of tenants. While those factors work against UDR, they're by no means deal breakers right now.
In fact, UDR is in solid financial shape, evidenced by the firm's decision to increase its dividend payouts by 2.33%. While the actual percentage increase is the smallest on our list, it tacks onto an already-high yield that makes this stock a good supplemental income holding for investors looking for diversification from commercial REITs. Currently, UDR offers investors a 3.49% payout.
UDR shows up on a recent list of
10 Stocks That Show the Real Estate Boom Has Arrived.