Public Storage Boasts Solid Fundamentals, Healthy Yield


S&P 500 componentPublic Storage ( PSA ) is gaining ground -- in more ways than one.

At the end of 2013, the real estate investment trust (REIT) had interests in 2,200 self-storage facilities in 38 states with approximately 141 million net rentable square feet.

It operates 188 storage facilities in seven Western European nations under the Shurgard brand.

It also has a 42% equity stake in NYSE-listedPS Business Parks ( PSB ) which operates about 29.7 million rentable square feet of commercial space.

Public Storage has taken advantage of a low-interest environment by acquiring 145 self-storage facilities since January 2012. In the fourth quarter alone, it acquired 89 facilities for a total price tag of about $765 million. At the end of 2013, development and expansion projects were in the works that are expected to add 1.8 million net rentable square feet.

In the REIT space, Public Storage has one of the most consistent track records of growth out there. Last week, the company reported another solid quarter with funds from operations (FFO) up 12% from a year ago to $2.08 a share. Sales growth accelerated for the second straight quarter, rising 9% to $513.5 million. In 2013, annual return on equity (12.5%) and pretax margin (53.4%) hit multi-year highs.

As part of its earnings report, the company announced a quarterly dividend of $1.40 a share, giving it a current yield of 3.4%. The dividend is payable on March 31 to shareholders of record as of March 14. Public Storage boasts a solid dividend growth rate of 15%.

Public Storage has been consolidating gains since November. Shares have come back to life in recent weeks, up about 15%, after hitting a low of 147.14 in December.

An Accumulation/Distribution Rating of B+ points toward steady institutional buying in recent weeks.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas

Referenced Stocks: PSA , PSB

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