High-Occupancy REIT With Dividend Growth
A few weeks ago, we discussed Gaming and Leisure Properties (ticker: GLPI), a real estate investment trust (REIT) owning casino properties across the United States.
The company has a 100% occupancy rate, which is incredible.
However, Gaming and Leisure owns only 71 properties, so the 100% occupancy rate, while impressive, has a small asterisk next to it.
I found another REIT with a 99.7% occupancy rate, all while owning over 2,400 properties!
The REIT is Essential Properties Realty Trust (ticker: EPRT), and its high occupancy rate is no fluke.
Since Essential Properties went public in 2018, the REIT has averaged a 99.8% occupancy rate.
Most REITs have occupancy rates around 95%, so Essential Properties is really special.
How does Essential Properties do it?
Essential Properties owns real estate in some very resilient industries, including car washes, small medical facilities, and daycares.
Plus, the REIT has a great dividend!
Essential Properties’ dividend yield is just under 4.2% and sits at its highest level in almost 2 years.
Higher interest rates are keeping the stock prices of REITs down, but part of the rise in dividend yield is from Essential Properties growing its dividend.
It has raised its dividend every year since 2018, averaging around 5% dividend growth each year.
And Essential Properties is raising its dividend again, but you need to act fast.
Its next quarterly payment will be $0.32 every quarter, which is 3% higher than the last payment.
To get the higher payment, you need to buy shares in Essential Properties before the market closes today.
Low single-digit dividend growth doesn’t sound like much, especially compared to some other stocks we’ve talked about.
But REITs are slow and steady investments, and aren’t known for fast growth.
While the growth is low, it will outpace inflation.
So, your payments will keep up with rising prices.
Essential Properties also has a great dividend payout ratio.
Most companies use earnings or free cash flow, but for REITs, we should use funds from operations (FFO), which adds back depreciation to earnings.
Over the past few quarters, Essential Properties’ dividend payout ratio has hovered around 60%.
Most REITs have payout ratios near 75%, so Essential Properties stands out here as well.
A lower payout ratio is great because it gives more room for the REIT to grow its dividend, and there’s a buffer to maintain payments even if Essential Properties starts making less money.
Do you know of other REITs with such an amazing occupancy rate?
Michael Jennings
Dividend Stocks Research
Category: Dividend Stocks To Buy?, Dividend Yield
