Investing a thousand dollars in this dividend-yielding stock could potentially generate a consistent monthly income stream with a 7% return rate.
Investing a thousand dollars in this dividend-yielding stock could potentially generate a consistent monthly income stream with a 7% return rate.
Various methods exist for generating passive income. A simple solution for beginners is investing in top-notch stocks that provide dividends.
EPR Properties (EPR 0.09%) stands out as an excellent choice among dividend stocks for individuals seeking passive income. This Real Estate Investment Trust (REIT) distinguishes itself by offering a monthly dividend instead of the regular quarterly payout and boasts an impressive dividend yield surpassing 7%. In comparison, the S&P 500 yields less than 1.5%. Let's delve deeper into some other factors that make it an ideal option for passive income.
Earning Experience
EPR Properties sets itself apart as an uncommon REIT by focusing on purchasing experiential properties such as cinemas, attractions, and experiential lodging establishments. It then leases these properties to tenants who manage the experiences, providing the REIT with stable rental income that is used to distribute dividends.
At a yield of more than 7%, a $1,000 investment could generate more than $70 annually in dividend income, or close to $6 each month. The greater the investment, the higher the monthly dividend income.
This substantial dividend is rooted in a stable financial base. EPR Properties anticipates generating between $4.80 and $4.92 per share of Adjusted Funds from Operations (FFO) this year, representing a 3.2% increase over last year at the midpoint. With its existing annual dividend rate of $3.42 per share, the REIT maintains a comfortable dividend payout ratio of approximately 70%. This provides a cushion while allowing it to preserve a decent sum of cash for funding new income-producing investments.
EPR Properties boasts a solid financial standing. It boasts investment-grade credit, supported by a low leverage ratio and primarily long-term, fixed-rate debt. It concluded the third quarter with $35.3 million in cash in its accounts and only $169 million outstanding on its $1 billion credit facility, following the repayment of a $136.6 million debt maturity.
Expansion and Improvement
EPR Properties continually bolsters and expands its income-generating experiential real estate portfolio. The REIT invested $82 million during the third quarter, including purchasing a fitness and wellness property in Colorado for $52 million. This brought its year-to-date total to $214.6 million, which included expenditures on experiential build-to-suit development and redevelopment projects. The company anticipates its investment spending for the year to range between $225 million and $275 million.
EPR Properties has already allocated approximately $150 million towards additional experiential development and redevelopment projects it expects to fund over the next two years. This offers some insight into its future growth prospects.
EPR Properties plans to finance future investments through retained cash after distributing dividends, its credit facility, and capital recycling. The company has sold $65.1 million worth of non-core properties, including cinemas and educational properties, through the first nine months of this year, realizing a $16 million profit on these sales. This additional cash enables it to invest in higher-quality properties while preserving its strong financial position.
The company's investments to enhance and expand its portfolio should increase rental income. This, in turn, should allow the REIT to raise its dividend in the future. It provided investors with a 3.6% dividend increase earlier this year.
An Exceptional Passive Income Investment
EPR Properties' high-yielding monthly dividend is underpinned by a robust financial foundation. The REIT is poised to increase its dividend in the future as it enhances and expands its experiential real estate portfolio. These qualities make it an excellent investment option for individuals seeking passive income.
Investing in EPR Properties could yield significant monthly dividends, with a potential of over $6 each month for every $1,000 invested, given its impressive dividend yield of over 7%. This financial stability is supported by a comfortable dividend payout ratio of approximately 70%.
Furthermore, EPR Properties' focus on capital recycling, such as selling non-core properties and reinvesting the profits, contributes to its ability to finance future income-producing investments and maintain its strong financial position, making it an exceptional choice for passive income investors.