The bear market in stocks is causing shares of most companies to decline by more than 20%. Some are down even more. Alexandria Real Estate Equities' (ARE 0.09%) stock price has plummeted roughly 38% from its recent peak.

The sell-off in Alexandria is a gift for dividend-seeking investors. With its stock price tumbling, the real estate investment trust's (REIT) dividend yield has risen to 3.4%. That's roughly double the dividend yield of the average stock in the S&P 500, which is around 1.7%. It's an attractive income stream, especially since it's coming from a company that should have no problem continuing to grow its dividend in the future. 

High-quality real estate on sale

Despite the plunging stock price, Alexandria Real Estate Equities is having another great year. The REIT has produced $6.28 per share of funds from operations (FFO) during the first nine months of 2022. That's 8.3% above its total in the same period of 2021. A big driver is the continued strong demand for laboratory space by the life science industry.

Alexandria has signed over 6.4 million square feet of leases this year, including more than 3 million square feet of renewals. Rates on those contracts are up 34% compared with those of expiring leases on the same space. That helped drive a 10.6% increase in its same-property net operating income (NOI) in the third quarter, the third-highest growth rate in the company's history.

With Alexandria's share price falling while its FFO rises, the company trades at a much more attractive value. The REIT expects its full-year FFO to come in at about $8.41 per share. Given its recent stock price of $138, it trades at 16.4 times its FFO. That's much cheaper than the 26.6 times FFO it fetched to start this year.

More growth ahead

With its FFO growing, Alexandria increased its dividend by another 5% last month. That continued the consistent growth in its dividend. Overall, Alexandria has expanded its payout at a 6.5% compound annual rate over the past five years. 

The REIT should be able to continue growing its payout in the future. It has a very low dividend payout ratio for a REIT at 56% of its FFO. That gives it a considerable cushion while allowing it to retain a significant percentage of its cash flow to fund its continued expansion. Alexandria also has a top-tier balance sheet. It has investment-grade ratings ranked in the top 10% of all publicly traded REITs. It also has significant liquidity and predominantly long-term fixed-rate debt with no maturities until 2025. These features give it the financial flexibility to continue growing its dividend as it expands its portfolio.

Alexandria currently has over 7.6 million rentable square feet of projects under construction or in its development pipeline. It has already pre-leased 78% of this space. That gives it the visibility that these projects will add an incremental $645 million of NOI as it wraps up construction over the next three years. That's a nice boost for a company that generated $912.4 million of NOI during the first nine months of 2022.

In addition to the uplift from those development projects, Alexandria should benefit from continued rent growth on its existing properties as legacy leases expire and roll over to market rates. On top of that, the company can continue using its strong financial profile to make value-enhancing acquisitions. It's on track to complete $2.65 billion of deals this year, which it has funded through its capital recycling program that has generated over $2.2 billion in asset sale proceeds.

A top-notch dividend growth stock at a value price

Alexandria Real Estate Equities continues to benefit from robust demand for lab space by the life science industry. That's enabling it to capture higher rental rates and complete value-enhancing developments that are growing its FFO and dividend. However, its share price has tumbled this year due to the bear market. That's giving investors the gift of being able to buy this high-quality dividend stock at a lower value and higher dividend yield.