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Putting $10,000 to work – look no further than this REIT

Putting $10,000 to work - look no further than this REIT
Dino
Kurbegovic
Updated: 31 May, 2022
3 mins read

As the likelihood of a recession rises, along with it comes a precipitous drop in bond rates and a steep fall in stock prices. Thus, investors may be eager to liquidate their stock holdings and seek safety in cash or short-term bank certificates of deposit.

For investors looking to put their money to work, a possibly better option than a Bank CD could be a Real estate investment trust (REITs). More particularly, Store Capital (NYSE: STOR), a company with a bond-like dividend that has been stress tested during the Covid pandemic and has emerged possibly stronger.   

Notably, $10,000 invested in the company when it went public in November 2014 would have turned that investment into $13,778, which for some might not be something to write home about. However, the dividends paid out in the past six years per share amount to $7.55 or roughly 4.6% annual return on investment.

STORE Capital – 6 Year Dividend & Price History 

How safe is STOR stock?

STOR is growing at an increased rate as adjusted funds from operations have been rising 12% year-on-year (YoY) in 2021, and predictions for 2022 are for a 7.3% growth YoY

Meanwhile, the company’s free cash flow is reinvested and boasts one of the highest growth rates among REITs, well over 5%. Dividends were also growing at an annual clip of 6.1%, with expectations that this could continue. 

Per-share growth of STORE Source: Investor presentation

The bottom line

It seems as if STORE has been an outstanding investment for the past several years. Yielding over 5%, raising the dividend by around 6% annually, and paying out cash to shareholders are just some of the benefits. 

At the current price of $27.35, a $10,000 investment would buy roughly 365 shares, bringing in $140 each quarter or a total of $562 annually. With the magic of compound investing over a 5-year period and a conservative estimate that the price would appreciate 4% annually, the initial investment would get you to 488 shares.

Along with the shares, the initial value would be worth $16,238.91 with $3,813.39 dividends paid out, equating to a 10.22% annualized return with dividend reinvestment.     

Like all investments, investing in STORE brings with it risks; however, numerous analysts consider real estate a proven hedge against inflation, and what better way to diversify a real estate portfolio than through a high-quality REIT. 

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

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Dino Kurbegovic
Author

Dino is an investor and technology enthusiast with years of experience in managing complex projects. At Finbold he covers stories on stocks, investing, micro and macroeconomic trends. Also, he’s also building a micro solar power plants in his hometown.

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