BPY Stock Yielding 5.14% in the Real Estate Sector
December 28, 2016
BPY Stock: A Top Dividend Stock
Dividend stocks have many different categories, such as high-dividend-yielding stocks and monthly dividend stocks. But the most difficult ones to find are top dividend stocks.
A top dividend stock would be one that sees a dividend being paid out and increasing over time. One such company doing this is Brookfield Property Partners LP (NYSE:BPY) stock. Shares of this stock are currently trading at $21.77 and yielding 5.14%. What’s more, the company has been paying an increasing dividend since becoming public in 2013.
The real estate company’s goal is to have the dividend continue to increase annually. It also anticipates appreciation between five and eight percent each year. (Source: “Overview,” Brookfield Property Partners LP, last accessed December 23, 2016.)
Using excess cash flow from traditional operations, Brookfield has also repurchased outstanding shares throughout the year at an average price of $21.42. This action represents a belief that the shares are undervalued in the eyes of the company. (Source: “Brookfield Property Partners Reports Third Quarter 2016 Results,” Brookfield Properties Partners LP, November 2, 2016.)
There hasn’t been much change in the share price. Therefore, if there is more capital that is available, share buybacks could continue.
High Barriers to Entry
Brookfield has a diversified set of assets in its portfolio. The majority of the revenue comes from its office buildings, which are considered a business with a high barrier to entry. The 149 buildings in the portfolio would be classified as “Class A” buildings; these are the ones most desired by investors since there will always be demand.
The buildings have achieved Class A status thanks to being located in the heart of downtown in cities around the world, including the U.S., China, and parts of Europe. Also, based on the revenue earned per square foot, Class A office buildings earn more than the other classes.
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Brookfield’s management team has diversified the business as well, with investments made in retail malls and industrial units. The portfolio also includes storage units and student housing.
Attractive Valuation
Brookfield has debt on its balance sheet, because it is difficult to run a real estate company without debt. To understand the debt of a company, the debt-to-capital ratio is useful. For BPY stock, the ratio is currently sitting at approximately 48%. This means that the debt is under control and that the company is being grown with the cash from operations and the assets in the portfolio. A ratio above 50% means that the company is growing the company using the debt instead.
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Another ratio that makes BPY stock appealing as a top dividend stock is the price-to-earnings (P/E) ratio. The ratio is 6.46 times for BPY stock and, for comparison’s sake, 26.02 times for the S&P 500. As of this writing, Brookfield stock is trading at approximately 25% of the index.
Final Thoughts on BPY Stock
Shares of BPY stock have been flat over the past year, creating an opportunity to own the shares before the market realizes the value this top dividend stock.
Brookfield also appears keen on rewarding shareholders, so future dividend hikes are not out of the question.
