It’s been 4 years since Security Web checked out EPR Properties (NYSE: EPR), which describes itself as “the main experiential actual property funding belief (REIT), specializing in choose enduring experiential properties in the actual property business.”
I positive hope the marketing consultant who got here up with that wasn’t getting paid by the phrase. Mainly, EPR is saying it’s the main firm that owns properties the place individuals do stuff and it makes a speciality of long-term properties the place individuals do stuff associated to actual property.
EPR owns 359 properties and rents them out to greater than 200 tenants – corporations that run theaters, ski resorts, amusement parks and extra. It additionally has a small portfolio of personal faculties and preschools.
4 years in the past, we gave EPR a “C” for dividend security, which meant there was a reasonable danger of a lower.
That was simply weeks earlier than COVID-19 hit, and the corporate promptly eradicated its month-to-month dividend in Could of that yr.
When EPR introduced the dividend again in July 2021, it was decrease than the $0.3825 per share it had been paying previous to the pandemic, and the dividend stays under that degree immediately.
Barring one other international pandemic, is EPR’s dividend protected?
Not surprisingly, EPR’s funds from operations (FFO) have been larger in 2022 than in 2021, when the corporate’s efficiency was nonetheless stunted by COVID-19. FFO is the measure of money stream that we use to research REITs’ dividend security.
Full-year outcomes for 2023 haven’t but been launched, however FFO possible climbed considerably. This yr, nevertheless, money stream is projected to dip, which is a crimson flag for Security Web.
EPR is projected to have paid out $248 million in dividends in 2023, which equals 64% of its FFO. This yr, the whole quantity paid in dividends is anticipated to extend barely to $250 million, which, mixed with falling FFO, will lead to a payout ratio of 68%.
Each of these payout ratio figures are good. So long as a REIT’s complete dividend payout is lower than 100% of its FFO, I’m completely happy.
EPR has paid shareholders $0.275 per share practically each month since March 2022. On the inventory’s present worth, that comes out to a pretty 7.3% yield.
The corporate can simply afford that dividend. Nonetheless, administration has proven it is going to take motion to slash the payout if crucial. Contemplating the anticipated decline in money stream this yr, that willingness to shortly pull the plug on the dividend means there’s nonetheless a reasonable danger of the dividend being lower.
Whereas a lot has modified on the earth since we final checked out EPR in February 2020, the inventory’s dividend security ranking stays the identical.
Dividend Security Ranking: C
If in case you have a inventory whose dividend security you’d like us to research, depart the ticker image within the feedback part under.
You too can have a look to see whether or not we’ve written about your favourite inventory lately. Simply click on on the phrase “Search” on the prime proper a part of the Wealthy Retirement homepage, kind within the firm title and hit “Enter.”
Additionally, remember the fact that Security Web can analyze solely particular person shares, not exchange-traded funds, mutual funds or closed-end funds.