Against an investing landscape in which heightened volatility will be present for the foreseeable future, I’m going to continue to build out our Safe Haven Portfolio with a conservative and compelling real estate investment trust, explains Bryan Perry, income expert and editor of Cash Machine.
STORE Capital (STOR) is a fast-growing commercial property REIT with a national real estate platform. The REIT sports a $5.94 billion market cap, and investment-grade balance sheet, a diversified portfolio with investment-grade tenants, high occupancy rates and a conservative payout ratio.
At the end of the third quarter of 2018, STORE Capital’s real estate portfolio included 2,206 properties. The REIT’s properties are spread out all over the United States and have a representation in 49 U.S. states.
Compared against its net lease peers, STORE Capital Corp. has the most diversified tenant base and the longest lease term in years, both of which greatly reduce cash flow risks during a recession.
One of the most attractive features of STORE Capital’s investment portfolio is that the REIT derives a large amount of its contractual revenues, roughly 75%, from investment-grade rated lease contracts. This greatly reduces cash flow risks in case a U.S. recession manifests itself.
STORE Capital’s occupancy rate at the end of September was 99.7%, indicating a high-quality, in-demand property portfolio. The portfolio occupancy rate has never dropped below 99.2% in the last 12 quarters.
The current $1.32 per share annual dividend payment translates to a current yield of 4.72% with the stock trading at $28. This is the kind of asset that makes for a good fit in a market that is having trouble making sense of the various situations at hand.
Stability of principle has taken on a higher priority of late and a rock-solid yield with a strong history of dividend growth will make for a fine addition to the Safe Haven Portfolio.
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