Extra Space Storage Inc's Dividend Analysis
Assessing the Sustainability of Extra Space Storage Inc's Upcoming Dividend
Extra Space Storage Inc (NYSE:EXR) recently announced a dividend of $1.62 per share, payable on 2023-12-29, with the ex-dividend date set for 2023-12-14. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Extra Space Storage Inc's dividend performance and assess its sustainability.
What Does Extra Space Storage Inc Do?
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Extra Space Storage is a fully integrated real estate investment trust that owns, operates, and manages almost 2,400 self-storage properties in 41 states, with over 180 million net rentable square feet of storage space. Of these properties, approximately one half is wholly owned, while some facilities are owned through joint ventures and others are owned by third parties and managed by Extra Space Storage in exchange for a management fee.
A Glimpse at Extra Space Storage Inc's Dividend History
Extra Space Storage Inc has maintained a consistent dividend payment record since 2004. Dividends are currently distributed on a quarterly basis. Extra Space Storage Inc has increased its dividend each year since 2009. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 14 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Extra Space Storage Inc's Dividend Yield and Growth
As of today, Extra Space Storage Inc currently has a 12-month trailing dividend yield of 3.52% and a 12-month forward dividend yield of 4.69%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Extra Space Storage Inc's annual dividend growth rate was 19.00%. Extended to a five-year horizon, this rate decreased to 12.60% per year. And over the past decade, Extra Space Storage Inc's annual dividends per share growth rate stands at an impressive 17.20%.
Based on Extra Space Storage Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Extra Space Storage Inc stock as of today is approximately 6.37%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Extra Space Storage Inc's dividend payout ratio is 1.20, and this may suggest that the company's dividend may not be sustainable.
Extra Space Storage Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Extra Space Storage Inc's profitability 9 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Extra Space Storage Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Extra Space Storage Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Extra Space Storage Inc's revenue has increased by approximately 12.30% per year on average, a rate that outperforms approximately 86.14% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Extra Space Storage Inc's earnings increased by approximately 25.10% per year on average, a rate that outperforms approximately 80.38% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 17.30%, which outperforms approximately 84.51% of global competitors.
Next Steps
Considering Extra Space Storage Inc's consistent dividend growth, robust yield on cost, and strong growth metrics, the company presents an attractive profile for dividend investors. However, the high payout ratio raises questions about the long-term sustainability of this dividend level. It is essential for investors to weigh the company's solid profitability and growth prospects against the payout ratio before making investment decisions. For those seeking to expand their portfolios with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for further research and analysis.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
