Some notes, as we’ve just gotten through another earnings report season:
1. It’s possible to get rich when you own REITs that have growing dividends.
2. Already proven: dividend growth (or lack thereof), and price appreciation – are correlated.
3. The best opportunities can be found with companies with the highest dividend growth prospects PLUS the widest margin of safety.
4. Knowing what to avoid, is just as important as knowing what to buy: avoid being a market timer, avoid trying to get rich buying shares in high-flying, air-gasping, super-high-dividend, beaten-down REITs (examples
5. Stocks with dividend increases… indicate a success of the company and its underlying business thesis.
6. An “Intelligent REIT Investor” (yes, it’s also my book title, co-written with Stephanie Krewson-Kelly; recommended)… an intelligent investor can gather a diversified portfolio of REITs that encompass a variety of property sectors and subsectors, just by looking for dividend growth.
7. Companies would not raise the dividend if the business was not experiencing growth in revenues, profit, and FFO (funds from operations).
8. Over the long run (1972-2015), dividend growers have outperformed the three other categories (no-growth dividend payers, non-dividend-paying stocks, and dividend cutters) while demonstrating less volatility. This combination of higher return and lower volatility would lead to a much better risk-adjusted return (as measured by the Sharpe ratio) Source: investorplace.com.
9. Due diligence is a must for any serious investor.
10. “The prime purpose of a business corporation is to pay dividends regularly and, presumably, to increase the rate as time goes on.” – Benjamin Graham in Security Analysis
11. Having set the scene with requisite and important principles & practices, here are 5 REITs that should boost their dividends…
Crown Castle (
STORE Capital (
Equinix, Inc. (
Iron Mountain (IRM): STRONG BUY based on fundamental analysis and deeply discounted share price with a P/FFO of 15.9.x. Solid growth forecast: 7% 2019, 11% 2020. Their records management business continues to deliver steady organic revenue growth and strong margin expansion while achieving meaningful scale and faster-growing adjacent businesses. A standout as high-yielding investment which continues to grow AFFO and EBITDA in mid to upper single digits, fueling continued dividend growth. Integration still a risk following acquisition of five entities within nine months, and investors dealing with “less paper” hype, company is achieving meaningful scale with faster growing adjacent businesses, data centers. Expects to grow data center business to 7% as company’s development pipeline fills out.
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