Unlocking the Power of Dividend Stocks: A Path to Long-Term Wealth
Investors seeking steady returns and income growth often turn to dividend stocks, which have historically outperformed non-payers. According to Ned Davis Research and Hartford Funds, dividend-paying stocks have delivered an average annual total return of 9.2% over the past 50 years, compared to 4.3% for non-payers. Dividend growers, in particular, have led the pack with an impressive 10.2% return.
One standout dividend stock that offers high total return potential is EPR Properties (NYSE: EPR), a real estate investment trust (REIT) focused on experiential properties. With a diverse portfolio of 352 locations, including movie theaters, eat-and-play venues, and attractions, EPR generates relatively predictable income through rent payments from over 200 tenants.
EPR’s Financial Performance
The REIT expects to generate $4.80 to $4.92 per share of funds from operations (FFO) as adjusted this year, supporting a monthly dividend of $0.285 per share, or $3.42 annually. This translates to a reasonable dividend payout ratio of around 70%, providing a comfortable cushion for future investments.
Attractive Yield and Growth Potential
EPR’s dividend yield of 7.5% far surpasses the S&P 500’s dividend yield of less than 1.5%. This means that every $1,000 invested in the REIT would generate approximately $75 in dividend income each year, compared to less than $15 for a similar investment in an S&P 500 index fund.
The company has invested over $6.9 billion in building its real estate portfolio, with a significant addressable market of over $100 billion for future acquisitions and developments. EPR targets various property types, including eat-and-play, gaming, experiential lodging, ski, attractions, cultural, live venues, and fitness and wellness properties.
Investment Strategy and Growth Prospects
EPR has invested $214.6 million in experiential properties this year, with plans to spend between $225 million and $275 million for the full year. The REIT has already committed to investing $150 million over the next two years in development and redevelopment projects. These investments are expected to drive cash flow and dividend growth, with EPR anticipating a 3.2% increase in FFO as adjusted per share this year.
CEO Greg Silvers highlighted the REIT’s potential for double-digit total shareholder returns, combining its high dividend yield with modest earnings growth. With ample liquidity, including $35.3 million in cash and an unused $1 billion credit facility, EPR is well-positioned to continue recycling capital and funding accretive new investments.
Unlocking Long-Term Wealth
EPR Properties’ unique combination of a high dividend yield and growth potential makes it an attractive investment opportunity. By investing in EPR, you could be on your way to a richer future, with the potential for steady income and long-term wealth creation.
Leave a Reply