Memphis-based Education Realty Trust’s (EDR's) announcement that it’s raising its quarterly cash dividend by 40 percent, to $0.07 per share, makes it the second straight day that a REIT announced that it’s increasing its dividend. Yesterday, Denver-based UDR raised its dividend $0.20 per share, pushing its payout by 8.1 percent.

"The positive momentum in the market, as well as the positive impact of our portfolio repositioning, led the board to believe that it’s time to increase the dividend,” says Randall H. Brown, EDR’s CFO.

These dividend increases are being driven by improvement in the market. But they also reflect how far REITs cut their dividends to preserve cash in the financial tumult of 2009. For instance, EDR cut its dividend in July 2009 in concert with an equity offering.

“The percentages are big when you have a small base,” says Paula Poskon, a senior research analyst with Robert W. Baird & Co., a Milwaukee-based wealth management, capital markets, asset management, and private equity firm. “The dividend levels are still well below what they were five years ago. You have to put it in the context of 2009 and 2010, when companies were cutting dividends to preserve cash.”

EDR is the sixth multifamily REIT to increase its dividend this year. In March, Birmingham, Ala.-based Colonial Property Trust increased its dividend, and in February Palo Alto, Calif.-based Essex Property Trust; Rochester, N.Y.-based Home Properties; and Denver-based AIMCO increased their dividends as well.

“Generally, we’re seeing that the companies that were underpaying their dividends [as a percentage of FFO] after they took big cuts in the downturn are announcing the larger dividend increases to get themselves closer to the 70 percent range that seems appropriate for the group longer term,” says Taylor Schimkat, an analyst with Keefe, Bruyette & Woods (KBW), an investment banking and security brokerage firm based in New York.

The analysts at KBW think that REITs with relatively lower payouts, like Atlanta-based Post Properties and AIMCO, are the most likely to raise dividends in the near term.

“We had a bunch last year, and I expect the dividend increases to continue going forward as fundamental recovery [and cash-flow improvement] continues,” says Haendel St. Juste, an analyst at KBW.

Poskon thinks multifamily REIT investors could be in for a treat in 2012 and maybe beyond. “In 2012, given the earnings the Street is forecasting, I don’t know how they [won’t] raise dividends,” she says.