Updated 3/5/25
Agree Realty Corporation (NYSE: ADC) is a real estate investment trust (REIT) that specializes in acquiring and developing properties leased to major retail tenants. Since its founding in 1971, the company has built a strong portfolio of net lease properties across the United States, partnering with well-known retailers that generate stable and predictable rental income.
Unlike traditional retail REITs that may be vulnerable to shifting consumer trends, ADC focuses on tenants with strong credit profiles and long-term lease agreements. This strategy helps provide steady cash flows, making the stock an attractive option for investors who prioritize reliable dividend payments.
With a market capitalization of nearly $8 billion and a historically low beta of 0.66, the stock tends to be less volatile than the broader market, which is another reason why income-focused investors often consider it a solid addition to their portfolios.
Key Dividend Metrics
📊 Forward Dividend Yield: 4.09%
💰 Forward Annual Dividend: $3.04 per share
📈 5-Year Average Dividend Yield: 4.12%
📅 Dividend Payment Frequency: Monthly
⚠ Payout Ratio: 168.54%
📆 Ex-Dividend Date: February 28, 2025
🎯 Next Dividend Payment: March 14, 2025
Dividend Overview
Agree Realty stands out from many REITs by offering a monthly dividend rather than the typical quarterly payout. For income investors, this can be an appealing feature, as it creates a more frequent cash flow stream. The current dividend yield of 4.09% is close to its five-year average, suggesting consistency in its distributions.
One area of concern, however, is the high payout ratio of 168.54%. A payout ratio over 100% means the company is distributing more in dividends than it earns in net income. For traditional companies, this would be a major red flag. However, since REITs are required to distribute at least 90% of their taxable income, they often report high payout ratios, making cash flow a more relevant measure of dividend sustainability.
Dividend Growth and Safety
Agree Realty has a solid history of dividend growth, increasing its payouts steadily over time. The company has never reduced its dividend, even during periods of economic uncertainty. That level of consistency is a major selling point for investors who prioritize reliable income streams.
That said, dividend safety is something to watch. While ADC’s cash flows appear strong enough to sustain its current dividend levels, a payout ratio above 100% limits the company’s flexibility to reinvest in growth without taking on additional debt. Investors should keep an eye on future earnings and free cash flow trends to ensure the dividend remains secure in the long run.
Chart Analysis
The chart for Agree Realty Corporation (ADC) shows a strong uptrend over the past year, with price action respecting key moving averages. The 50-day simple moving average (SMA) recently turned downward but is beginning to flatten out, while the 200-day SMA continues to trend upward, indicating long-term strength.
In the latter months of 2024, the stock experienced a pullback, testing support near the 200-day SMA before rebounding. The recent price movement shows a breakout above the 50-day SMA, suggesting renewed momentum. The stock’s ability to stay above this level in the coming sessions will be key in determining the next phase of its trend.
Volume levels indicate moderate participation, with occasional spikes in activity, particularly during periods of price consolidation. Notably, higher volume on upward moves suggests buying interest, while lower volume on pullbacks implies a lack of aggressive selling pressure.
The RSI (Relative Strength Index) is currently trending upward but remains below overbought territory, suggesting that the stock still has room to move higher without immediate risk of a sharp pullback. However, if RSI approaches the 70 level, traders may begin to take profits, leading to a potential slowdown in upward momentum.
Recent candlesticks show strong buying pressure, with the latest close near the high of the session. The last five trading days reflect higher lows, reinforcing bullish sentiment. However, resistance near previous highs around $75.50-$76 may create some short-term hesitation.
Analyst Ratings
📈 Upgrades:
🔵 Barclays – On March 4, 2025, Barclays analyst Richard Hightower upgraded ADC from Underweight to Equal Weight, raising the price target to $75 from $74. This shift was based on an improved valuation and a favorable macroeconomic outlook, which could push investors toward companies like Agree Realty that have a strong tenant base with a high percentage of investment-grade tenants.
🟢 UBS – On January 6, 2025, UBS upgraded ADC from Neutral to Buy, adjusting the price target to $84 from $79. The decision was driven by the company’s financial stability and long-term growth potential, as well as its strong cash flow generation.
📉 Downgrades:
🔴 RBC Capital – On February 13, 2025, RBC Capital lowered its price target on ADC to $78 from $79, though it maintained an Outperform rating. The adjustment was a minor valuation reassessment, indicating that while the stock remains attractive, near-term upside might be slightly limited.
🟠 JMP Securities – On December 17, 2024, JMP Securities downgraded ADC from Market Outperform to Market Perform, citing cautious sentiment regarding the company’s near-term stock movement. The downgrade reflects concerns over potential headwinds in the REIT sector despite ADC’s strong fundamentals.
💰 Consensus Price Target:
As of the latest updates, analysts have set a 12-month price target of approximately $79.60, with estimates ranging between $74 and $89. This implies a potential upside of 7.86% from the current price, suggesting analysts see moderate growth potential ahead.
These mixed ratings reflect the balance of optimism and caution surrounding Agree Realty. While its financial strength and tenant quality continue to attract bullish sentiment, some analysts remain wary of valuation concerns and broader market conditions.
Earnings Report Summary
Agree Realty Corporation wrapped up its latest earnings report with solid results, showing steady growth in key areas. The company continued to expand its portfolio while maintaining strong financial health, making it an interesting stock for dividend and REIT investors.
Financial Performance
For the full year ending December 31, 2024, the company posted $181.8 million in net income, marking a healthy increase from the previous year. The fourth quarter alone saw net income rise to $44.1 million, showing the company is maintaining its momentum despite broader economic uncertainties. However, earnings per share remained stable, suggesting that while profits grew, the number of outstanding shares may have diluted some of that growth.
Funds from Operations (FFO)
One of the most important metrics for REITs, Funds from Operations (FFO), also moved in the right direction. For the full year, FFO climbed to $376.5 million, a notable jump from the previous year. On a per-share basis, the increase was more modest, showing that while overall cash flow improved, share dilution played a role in limiting growth on a per-share level. The fourth quarter followed a similar pattern, with FFO rising significantly but per-share growth being more incremental.
Adjusted Funds from Operations (AFFO)
The company also reported strong numbers in Adjusted Funds from Operations (AFFO), another key metric that indicates how well a REIT can sustain its dividend payments. For the year, AFFO surged to $378.7 million, up from the prior year’s total. That’s a solid increase, giving investors confidence that the company’s dividend is well-supported by operational cash flow. The fourth quarter saw even sharper growth in AFFO, a positive sign as the company heads into 2025.
Overall, the latest earnings report reinforces Agree Realty’s ability to generate consistent cash flow while continuing to expand its portfolio. The company remains in a strong position financially, but investors will want to watch share dilution and external market factors to see how they might impact future earnings growth.
Financial Health and Stability
Revenue growth remains healthy, with a year-over-year increase of 11.5%. Operating margins are also solid at 46.6%, reflecting efficient cost management. However, return on equity (ROE) sits at just 3.55%, which is relatively low compared to other REITs. This is partly due to the company’s capital structure and its use of debt to finance property acquisitions.
Speaking of debt, ADC currently carries $2.81 billion in total debt, with a debt-to-equity ratio of 50.93%. While this is within a reasonable range for a REIT, rising interest rates could lead to higher financing costs, which may affect profitability in the future. Fortunately, the company’s operating cash flow of $431.97 million suggests it has enough liquidity to handle its financial obligations and continue paying dividends.
Valuation and Stock Performance
At its current price of $75.35, Agree Realty is trading near the higher end of its 52-week range of $54.78 to $78.39. Over the past year, the stock has gained 29.54%, significantly outperforming the S&P 500’s 13.19% return during the same period.
However, valuation metrics suggest the stock may be somewhat expensive. The trailing price-to-earnings (P/E) ratio stands at 41.68, well above the average for REITs. The forward P/E of 38.91 also indicates that investors are willing to pay a premium for the company’s earnings.
For value-focused investors, the stock’s price-to-book (P/B) ratio of 1.49 is another factor to consider. While this isn’t excessively high, it does indicate that ADC is trading at a premium to its net asset value.
Risks and Considerations
While Agree Realty has a strong track record and stable cash flows, there are a few risks to keep in mind.
One of the biggest concerns is the high payout ratio. Although REITs typically report high payout ratios due to their tax structure, investors should monitor cash flow closely to ensure dividend sustainability. If cash flows were to decline, ADC might need to slow dividend growth or adjust its payout strategy.
Another factor to consider is interest rate sensitivity. REITs rely heavily on debt financing, and as interest rates rise, borrowing costs could increase. This might impact future property acquisitions or expansion plans, which could, in turn, affect long-term growth potential.
Finally, while ADC primarily leases properties to high-credit tenants, there is always some level of risk in the retail sector. Changes in consumer behavior, economic downturns, or tenant bankruptcies could affect occupancy rates and rental income.
Final Thoughts
Agree Realty Corporation has built a reputation as a reliable income investment, thanks to its strong portfolio of retail properties and steady dividend payments. The monthly dividend is a key advantage for income investors, offering a more frequent cash flow compared to quarterly payouts.
While the stock’s valuation appears elevated, long-term investors who prioritize income stability over short-term price movements may still find ADC an attractive option. However, those looking for value may want to wait for a better entry point, especially given the company’s high payout ratio and potential exposure to rising interest rates.
Overall, Agree Realty remains a solid choice for investors who seek dependable dividends, but it’s important to keep an eye on cash flow trends and broader market conditions that could impact its future performance.
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