A REIT owns, operates, or funds income-generating real estate. REITs must pay at least 90% of their taxable profits as dividends to shareholders, giving investors real estate exposure without the hassle of maintaining actual assets.
Monthly dividends from REITs like EPR Properties (NYSE: EPR) and Reality Income (NYSE: O) may provide constant income for investors, especially retirees. Let's evaluate these two REITs for your portfolio.
EPR Properties supports experiential economy You've probably visited EPR Properties' movie theaters, TopGolf, amusement parks, and ski slopes. The REIT rents 359 buildings in 44 states and Canada to experiential tenants. Since coming public in 1997, the firm has paid a dividend, switching from quarterly to monthly in 2013.
EPR Properties pays $0.275 per share in monthly dividends, yielding 6.9% annually. Besides the monthly dividend, the stock has appreciated 20% in the past year. The firm struggled during the pandemic when customers couldn't visit its premises, requiring it to amend its contracts with renters who couldn't pay rent. The stock is now down 30% from pre-pandemic levels.
sales and net income are rising again, with the company's trailing-12-month sales of $662 million surpassing its 2019 revenue of $652 million. The company's trailing-12-month net income of $176 million is up from its 2020 net loss of $132 million, but not as high as its 2019 $202 million.
Despite the macro situation, EPR Properties managed to grow its portfolio from 280 properties in 2020 to 359 now. Management maintained its net debt of $2.7 billion and reduced its annual interest expenditure from $158 million in 2020 to $120 million during the past 12 months.
he movie theater business accounts for 39% of EPR Properties' portfolio. Movie theaters sold 200 million fewer domestic tickets in 2019 than in the early oughts before the epidemic. Management plans to shift its strategic focus from theater properties to other experiential property types.
However, its forward P/E ratio makes EPR Properties shares appear inexpensive. The company has a forward P/E ratio of 18.4, much below its five-year historical median of 23.3.