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Ushering in good news for its shareholders, Extra Space Storage, Inc. EXR recently announced a 10.3% hike in its quarterly cash dividend. The company will now pay a dividend of 86 cents per share, up from 78 cents paid earlier. The raised dividend will be paid on Jun 29, 2018, to shareholders of record as of Jun 15.
Based on the increased rate, the annual dividend comes to $3.44 a share, resulting in a 3.6% yield, considering Extra Space Storage’s closing price of $95.15 on May 25. Since the company’s dividend yield surpasses the industry average of 3.3%, the stock is likely to draw investors’ attention.
Moreover, the company remains committed to increasing shareholders’ wealth. In May 2016, the company announced a 32.2% hike in quarterly dividend payout. With that, Extra Space Storage achieved a five-year total increase of 212% in dividend. In fact, solid dividend payouts are arguably the biggest enticement for real estate investment trust (REIT) investors.
Extra Space Storage has solid fundamentals to back dividend hikes. It is a self-storage REIT that offers a vast array of well-located storage units to its customers, for boat, recreational-vehicle and business purposes. As of Mar 31, 2018, Extra Space Storage enjoyed ownership, had ownership stakes in or managed 1,523 stores in 39 states of the United States, Washington, D.C. and Puerto Rico. Its ROE is 18.85%, higher than the industry average of 4.9%.
Further, the company made concerted efforts to consistently grow its business and achieve geographical diversity through accretive acquisitions, mutually beneficial joint-venture partnerships and third-party management services. Over the past five years, Extra Space Storage acquired $4.5 billion in properties. The company gained an increased scale in several core markets on the back of these acquisitions. It also fortified its presence in a number of new markets.
Moreover, the industry is characterized by fragmented ownership and only around 20% of the total self-storage square footage is under REIT’s ownership. This creates solid scope for consolidation at some level in the future. With a solid balance sheet, Extra Space Storage remains well poised to compete for acquisitions.
Extra Space Storage currently has a Zacks Rank #3 (Hold).
Shares of Extra Space Storage have outperformed the industry in the past three months. The company’s shares have gained 11.8%, while the industry ascended 7.8% during this period.
Stocks Worth a Look
A few better-ranked stocks from the same space include Arbor Realty Trust ABR, Prologis, Inc. PLD and Chatham Lodging Trust CLDT. All the stocks carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arbor Realty Trust’s Zacks Consensus Estimate for 2018 FFO per share rose 14.4% to $1.03 in a month’s time. Its shares have returned 14.9% over the last three months.
Prologis’ FFO per share estimates for the current year moved up 0.7% to $2.98 in a month’s time. Its shares have gained 6.9% over the last three months.
Chatham Lodging’s FFO per share estimates for the current year inched up 1% to $1.93 in a month’s time. Its shares have gained 14.2% over the last three months.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Arbor Realty Trust (ABR) : Free Stock Analysis Report
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