Investors looking for a hit in the commercial real estate sector have outperformed material assets such as land and buildings. One of those investments is Stag Industrial REIT (NYSE: STAG).
Stag REIT is very popular with dividend investors and those looking to invest in real estate. Furthermore, during my research of the stock, I found Stag REIT was one of the top recommend monthly dividend stocks.
A myriad of factors has pushed up prices, from a lack of supply to increased bullishness owing to post-pandemic solid economic activity and forecasts of moderate inflation.
Is Stag a REIT? What does it mean?
Stag Industrial is a pure industrial traded REIT that owns 100 million square feet in 492 buildings. The company is known for managing risks and adopting a diversified approach.
A REIT is a real estate investment trust which is specifically designed to pass investment income to investors. This is due to a particular provision of the tax code by the IRS.
Stag REIT is traded on the exchanges, which is good because investors can easily see the prices and have liquidity. This is the opposite of non-traded REITs that are traded on secondary markets and are not very liquid.
What is Stag Industrial REIT?
Stag Industrial REIT is a publicly-traded REIT company that creates, acquires, and manages self-storage real estate. Stag currently owns and operates a portfolio of 114 properties, totaling more than 6.4 million square feet of rentable space primarily in the Northeast and Mid-Atlantic regions of the United States. Fundamentally, Stag has issued 3 classifications of common shares: A, B, and C. Each of these classifications may be converted to the others and the holders of each classification have equal rights in voting for the election of directors and for all other corporate purposes.
Stag Industrial REIT Inc. began its operations on January 28, 2011 with a portfolio of 19 properties, 6.0 million square feet and $30 million in total assets under management by J.P. Morgan Securities, LLC as Manager, as well as certain co-managers and equity participants.
In May 2011, Stag acquired its first acquisition, Washington-Stoughton Lumber Co. (WSL), a tenant-occupied self-storage facility in Stoughton, Massachusetts. WSL was a successful acquisition for the company with high occupancy and long term contracts. One year later, on January 28, 2012, Stag acquired 50% of Penn State Self Storage (PSS) – a leading self-storage provider with more than 30 facilities in western Pennsylvania – from Central Huntingdon Building Associates (CHBA). In December 2012, Stag completed the acquisition of the remaining 50% interest in PSS from CHBA.
In July 2012, Stag completed a $7.9 million purchase of #2101 Oakland Road in Bridgeport, CT. In September 2013, Stag acquired 8 sites of Self Storage Management LLC (SSM) located in White Plains and Yonkers, NY.
The company maintains a portfolio of 114 properties at 58 locations including seven facilities in Florida (two) and 13 facilities in Kansas (10). The portfolio is 94% occupied, including 17 facilities that are over 95% occupied while the remaining facilities have lease roll-over clauses with current tenants. The current occupancy rate of Stag’s portfolio is 93.5%, subject to lease renewal.
How Often Does Stag REIT Pay Dividends?
Stag Industrial REIT pays a monthly dividend. The company has increased its dividend every year since going public in 2011 due to its strict capital allocation policy.
Stag’s stock is currently yielding 4.2% and has an annual dividend of $1.45 per share.
Shares have risen more than 70% over the past five years, and long-term investors can learn more about the company and its innovative approach to capital management, including the monthly dividend payout. The company currently has 39 states (as of December 2020).
Is Stag Industrial REIT a Good Investment?
Investors often ask me if Stag REIT is a good investment. The short answer is yes; I believe Stag REIT is a good investment if you understand the risks associated with real estate to the pandemic, are looking for income, and are not overly exposed to real estate in your portfolio. I would personally look for a dip before I bought it. Below are some key pivot levels.
It should also be noted that interest rates are rising in anticipation of inflation. The 10-Year is currently below 1.7%, and high-quality yields remain elusive, and junk bonds yield less than 4.5%.
This critical because I think risking inflation could increase the value of the buildings, but the increasing yields could put pressure on the dividend payout. In the end, I think inflation will increase the value of the holdings, but the yield may go down significantly.
Stag REIT Pivot Points
State REIT 1 Day Moving Averages
|Exponential Moving Average (10)||36.28||Buy|
|Simple Moving Average (10)||36.39||Buy|
|Exponential Moving Average (20)||35.82||Buy|
|Simple Moving Average (20)||35.87||Buy|
|Exponential Moving Average (30)||35.35||Buy|
|Simple Moving Average (30)||35.24||Buy|
|Exponential Moving Average (50)||34.55||Buy|
|Simple Moving Average (50)||34.25||Buy|
|Exponential Moving Average (100)||33.33||Buy|
|Simple Moving Average (100)||32.62||Buy|
|Exponential Moving Average (200)||32.11||Buy|
|Simple Moving Average (200)||32.16||Buy|
|Ichimoku Cloud Base Line (9, 26, 52, 26)||35.2||Neutral|
|Volume Weighted Moving Average (20)||35.9||Buy|
|Hull Moving Average (9)||36.52||Sell|