This High-Yield REIT Just Raised Its Dividend by More Than 6%.
Ebube JonesThu, September 10, 2026 at 2:30 AM GMT+3 5 min read
Retail REITs have been one of the steadier income plays in 2026. Grocery-anchored and strip-center landlords are benefiting from limited new supply and strong tenant demand, with many properties holding high occupancy and pushing rents higher as retailers compete for space.
Phillips Edison & Company (PECO) is now adding to that dividend-growth trend. On Sept. 1, the board raised its monthly dividend by 6.2%, to $0.115 per share from $0.1083. That brings the annualized payout to $1.38 from $1.30. Shareholders of record as of Sept. 15 will receive the first payment at the new rate on Oct. 1.
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At recent prices, Phillips Edison offers a forward dividend yield of about 3.5%. This is the REIT's sixth straight annual dividend increase and its third consecutive raise of more than 5%.
So, what is driving the higher payout, and can Phillips Edison sustain its dividend-growth streak into 2027? Let's find out.
The Numbers Behind the Dividend Hike
Phillips Edison & Company owns grocery-anchored neighborhood shopping centers and collects rent from tenants that sell everyday goods and services. Its shares are up 8.8% over the past 52 weeks and 9.4% so far this year.
At about 14.1x forward earnings, PECO stock also trades well below the real estate sector average of 30.5x.
On Sept. 1, Phillips Edison raised its monthly dividend by 6.2%, to $0.115 per share from $0.1083. The new rate equals $1.38 annually, up from $1.30, and gives the stock a forward yield of about 3.5% at recent prices. Investors who owned PECO stock as of Sept. 15 will receive the first payment at the higher rate on Oct. 1. This was Phillips Edison's sixth straight annual dividend increase and its third straight raise above 5%. Its forward payout ratio was 113.4% before the increase, so continued FFO growth will be important for supporting the larger dividend.
The latest quarterly results point in the right direction. Second-quarter Nareit FFO rose 8.1% year-over-year (YoY) to $0.67 per diluted share, while Core FFO increased 7.8% to $0.69. Same-center NOI grew 3.8%, showing that existing properties are producing more income. Phillips Edison signed a record 304 leases covering about 1.2 million square feet. New leases carried rent spreads of 33.7%, while renewal spreads reached 21.2%. Portfolio occupancy was 97.3%, and inline occupancy hit a record 95.5%. Management also lifted its 2026 guidance midpoint for Nareit FFO, Core FFO, and same-center NOI growth to 6.3%, 6.2%, and 3.7%, respectively.
What Could Fuel Future Growth
Phillips Edison & Company's grocery-anchored centers benefit from steady traffic because shoppers regularly visit them for everyday needs. That makes its properties less dependent on discretionary spending than many other retail centers.
In the second quarter, Phillips Edison signed a record 304 leases covering about 1.2 million square feet. New leases were signed at rents 33.7% above the expiring rates, while renewal rents rose 21.2%. Inline occupancy reached a record 95.5%, and total portfolio occupancy stood at 97.3%.
Property acquisitions offer another growth path. Phillips Edison bought $266.9 million of assets in the first half of 2026, including five grocery-anchored centers in the second quarter. Those properties were anchored by Safeway, Kroger (KR), Lunds & Byerlys, and Cub Foods and are located in markets including Seattle, Minneapolis, and Dallas. Management raised its full-year gross acquisition target to $500 million to $600 million, which is $100 million above its original plan.
Phillips Edison also uses three institutional joint ventures to manage 28 additional centers. In the second quarter, its Necessity Retail Venture LLC joint venture bought Oracle Crossing, a 265,148-square-foot shopping center anchored by Sprouts Farmers Market (SFM) in a Tucson suburb. This setup helps the company grow while earning management fees.
PECO Stock's Outlook Through Analysts' Eyes
Phillips Edison & Company is set to report third-quarter results on Oct. 22. Analysts expect the company to earn $0.70 per share for the September quarter, up 7.69% from $0.65 a year earlier. For all of 2026, the consensus calls for earnings of $2.77 per share, up 6.54% from $2.60 in 2025.
Analyst views are positive, though not overly bullish. Wells Fargo cut its price target to $43 from $47 and kept an "Equal Weight" rating. The firm expects REITs to remain a relatively stable part of the market through the end of 2026, helped by improving fundamentals, fewer property transactions, reasonable valuations, and the prospect of faster earnings growth across most property types in 2027.
Barclays took a slightly more positive step on Aug. 17, raising its price target to $46 from $45 while keeping an "Equal Weight" rating. Analyst Richard Hightower pointed to Phillips's acquisition growth prospects, but stopped short of upgrading the stock.
All 15 analysts covering PECO stock rate it a consensus "Moderate Buy." Their average price target is $45.62, which suggests about 17% upside from recent share-price levels.
Conclusion
PECO's dividend hike looks supported by more than management's willingness to return cash to shareholders. Rising FFO, strong leasing spreads, record inline occupancy, and a larger acquisition target give the grocery-anchored REIT several avenues to grow cash flow. The 3.5% forward yield is not the sector's highest, but a sixth straight annual increase gives income investors a reason to pay attention. With analysts' mean target pointing to 17.1% upside, PECO shares appear more likely to trend higher than lower if it delivers on its 2026 guidance. Still, the next earnings report will be key to confirming that growth remains on track.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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