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Public Storage Is A Cash Cow, But Be Content With The 3.7% Dividend

Published Sat, 13 Apr 2019 06:45:00 -0400 on Seeking Alpha

Public Storage (PSA) is one of the largest REITs on the NYSE with a market cap of $37.1 billion. Despite its size, however, the stock price has declined by 10% vs. a 50% gain on the SPDR S&P 500 ETF (SPY).
Given the defensive nature of REITs and the company’s resilient business model, the stock price might outperform the S&P 500 in the event of a recession or a major downturn in the U.S. stock market - none of which we are calling for at the moment. One of the major industry-specific headwinds, however, is an increased amount of supply that threatens occupancy rates and potential rent increases. The company has a sticky customer base and significant market share across the entire portfolio. It can still grow organically though because of its strong brand awareness and increased online marketing spend.
Management expects the company is well positioned to achieve high margins on the existing development projects and will become more aggressive in terms of acquisitions in 2019.
Business Overview
Public storage owns 162 million square feet of 2,429 self-storage facilities and has a broad base of 1.4 million customers in the U.S. In several western European countries the company has developed the “Shurgard” brand with 12.6 million square feet and 232 storage facilities. Shurgard went public on Euronext Brussels stock exchange at 23 euros per share with a valuation of 2.04 billion euros in October 2018. By going public the company raised around 575 million... Read more