EPR Properties: 1 Top Monthly Dividend Stock Yielding 5.43%
This Monthly Dividend Stock a Top Pick for Income Investors
For investors hoping to receive a steady stream of monthly income from their portfolios, few things are better than monthly dividend stocks. Although the majority of dividend-paying stocks in the U.S. distribute on a quarterly basis, there are still solid monthly dividend stocks with handsome yields.
Where might you find them?
Well, real estate investment trusts, or REITs, are a good place to start. Because these companies are essentially giant landlords, they have predictable cash flow, and some of them have the ability to distribute on a monthly basis.
When it comes to REITs, investors generally have two choices: to invest in a highly diversified REIT or a highly specialized one. But there is one monthly dividend stock that allows investors to have the benefits of both: EPR Properties Real Estate Trust (NYSE:EPR). The company maintains a specialized orientation, complemented by diversification across and within segments.
EPR Properties was founded in 1997 and is headquartered in Kansas City, Missouri. Today, it has an investment portfolio of over $5.0 billion. The company has three primary investment segments: entertainment, recreation, and education. EPR Properties currently have over 290 locations spread across 41 states and with over 250 tenants.
The company calls itself a “diversified specialist.” As of September 30, 54% of EPR Properties’ net operating income comes from its entertainment segment. Education accounts for 24%, recreation for 20%, and the remaining two percent comes from its “other” segment. (Source: “NOI Breakdown,” EPR Properties Real Estate Trust, last accessed December 23, 2016.)
When the average yield of all S&P 500 companies is a mere two percent, this monthly dividend stock’s distributions stand out. Paying $0.32 per share every month, EPR Properties has an impressive annual dividend yield of 5.43%.
The company has also been growing its payout. EPR Properties has raised its dividends in each of the last six years, at an average annual rate of seven percent.
What’s more is the company’s total shareholder return, which includes stock price appreciation, dividends, and buybacks. In the past 10 years, this monthly dividend stock generated 212.19% of total return to shareholders, which outperformed both the Russell 200 (99.93%) and MSCI US REIT Index (83.02%). (Source: “Total Return To Shareholders,” EPR Properties Real Estate Trust, last accessed December 23, 2016.)
Of course, to keep its track record of dividends continue, the company needs to grow its business. And on that front, there has been good news.
EPR Properties reported earnings last month. In the third quarter of 2016, the company generated $125.6 million of total revenue, representing a 16% increase year-over-year. Net income came in at $0.81 per share, a seven-percent improvement from the year-ago period. Adjusted funds from operations (AFFO), an important measure of a REIT’s operating performance, increased 15% to $78.8 million. (Source: “EPR Properties Reports Third Quarter 2016 Results,” EPR Properties Real Estate Trust, November 2, 2016.)
By the end of September, the company’s entertainment segment included 139 megaplex theater properties, eight entertainment retail centers, and eight family entertainment centers. These entertainment properties were 99% leased.
Its education segment included investments in 74 public charter school properties, 24 early education centers, and five private school properties. They were 100% leased by the end of the third quarter.
The recreation segment included investments in 11 metro ski parks, five water parks, and 23 golf entertainment complexes. They were also 100% leased by September 30.
This Monthly Dividend Stock Could Do Even Better in 2017
In light of such impressive results, EPR Properties has raised its guidance for AFFO from a range of $4.72 to $4.82 to a range of $4.75 to $4.82. The company has also issued a guidance for 2017, with AFFO expected to be in a range of $5.05 to $5.20, which would be a sizable improvement from this year’s expected results.
With solid operations and a strong investment portfolio, the best could be yet to come for investors of this monthly dividend stock.