If You Invested $10,000 In Invitation Homes Five Years Ago, Here's How Much In Dividends You Would Have Now

When considering buying dividend stocks, total return is not just about the price today versus the price an investor originally paid for the shares. Total return includes share price appreciation plus the dividends received, and the return may differ, depending on whether the investor collects or reinvests the dividends.

The dividends a company pays can vary over time. Many investors focus on the present dividend yield, but the dividend growth record over several years is equally important.

Take a look at one real estate investment trust (REIT) that has been an excellent investment over the past five years, both for appreciation as well as dividend growth and regular payments.

Invitation Homes Inc. INVH is a Dallas-based residential REIT that purchases large numbers of higher-quality single-family homes and then leases or lease-purchases them to higher-income tenants. In recent years, it has also begun a build-to-rent program through affiliations with homebuilders.

Invitation Homes has over 80,000 homes for lease in desirable neighborhoods across the U.S. and is now the largest owner/landlord of single-family homes in the country. It focuses on communities with strong rental demand and where purchasing homes is difficult because of high prices and a lack of inventory. Its recent occupancy rate was 96.9%, and it has 80% resident retention.

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On Dec. 8, Invitation Homes announced a 7.7% increase in its quarterly dividend, from $0.26 to $0.28 per share, payable on Jan. 19 to shareholders of record on Dec. 27. The ex-dividend date is Dec. 26.

If you had invested $10,000 in Invitation Homes near its closing price on Dec. 11, 2018, you would have purchased 462.53 shares at $21.62 per share. The quarterly dividend at the time was $0.11 per share.

Five years later, the most recent closing price of Invitation Homes was $33.28 per share. Since December 2018, the dividend has increased six times for a total of 154.54%. During that time, there have been no cuts or suspensions to the dividend.

Your original $10,000 investment would have grown to $17,115.28, for a five-year return of 71.14%. Of the total, $1,498.59 would be from dividends and $5,616.69 would be from appreciation.

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If you reinvested your dividends instead, as many investors do, you would now have 519.36 shares and your original $10,000 investment would be worth $17,285.13, for a total return of 72.84%. 

In recent news, Invitation Homes' third-quarter earnings report was somewhat mixed. On Oct. 25, it announced funds from operations (FFO) of $0.44 per share, which just missed the estimates of $0.45. Revenue of $617.7 million beat the analyst consensus estimate of $611.77 million and was 8.62% better than revenue of $568.67 million in the third quarter of 2022.

On Oct. 30, Oppenheimer & Co. Inc. analyst Tyler Batory upgraded Invitation Homes from Perform to Outperform and announced a $35 price target. The analyst saw rent growth and occupancy levels remaining at about the pre-COVID-19 pandemic averages in 2024. In November, Raymond James analyst Buck Horne maintained an Outperform rating on Invitation Homes while lowering the price target from $38 to $37.

Invitation Homes recently touched a high of $34.08 before backing off a bit. Invitation Homes has a remarkable dividend growth rate to go along with stellar appreciation.

But Congressional Democrats last week introduced the End Hedge Fund Control of American Homes Act of 2023. If the bill passes, it will restrict hedge funds, REITs and other pooled funds from investing in single-family homes in the future and mandate that such investors sell off at least 10% of the total number of homes they own each year over 10 years. Within 10 years REITs such as Invitation Homes could no longer own any single-family homes.

The bill may have difficulties in getting passed, but the publicity surrounding it could temporarily put pressure on shares of Invitation Homes and similar REITs.

Weekly REIT Report: REITs are one of the most misunderstood investment options, making it difficult for investors to spot incredible opportunities until it's too late. Benzinga's in-house real estate research team has been working hard to identify the greatest opportunities in today's market, which you can gain access to for free by signing up for the Weekly REIT Report.

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