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 true 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 folks do stuff and it focuses on long-term properties the place folks 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 average threat 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 stage right now.
Barring one other international pandemic, is EPR’s dividend secure?
Not surprisingly, EPR’s funds from operations (FFO) had been greater in 2022 than in 2021, when the corporate’s efficiency was nonetheless stunted by COVID-19. FFO is the measure of money circulation that we use to investigate REITs’ dividend security.
Full-year outcomes for 2023 haven’t but been launched, however FFO doubtless climbed considerably. This yr, nonetheless, money circulation is projected to dip, which is a purple 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 entire quantity paid in dividends is predicted 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 whole 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 value, that comes out to a horny 7.3% yield.
The corporate can simply afford that dividend. Nonetheless, administration has proven it should take motion to slash the payout if crucial. Contemplating the anticipated decline in money circulation this yr, that willingness to shortly pull the plug on the dividend means there may be nonetheless a average threat of the dividend being lower.
Whereas a lot has modified on the planet since we final checked out EPR in February 2020, the inventory’s dividend security ranking stays the identical.
Dividend Security Score: C
If in case you have a inventory whose dividend security you’d like us to investigate, depart the ticker image within the feedback part under.
You may as well have a look to see whether or not we’ve written about your favourite inventory just lately. Simply click on on the phrase “Search” on the prime proper a part of the Rich Retirement homepage, sort within the firm identify and hit “Enter.”
Additionally, take into account that Security Web can analyze solely particular person shares, not exchange-traded funds, mutual funds or closed-end funds.