Daily Gains Letter

The Ultimate Dividend Paying Stock with a 23-Year Track Record

By for Daily Gains Letter |

DL_Feb_11_2013_JohnLow interest rates might be good for borrowing money and buying assets, like a house, but they can put a serious dent in a retirement fund. By taking “income” out of fixed income, the Federal Reserve has made retirement a pipe dream for many.

In the past, investing in bonds and treasuries meant those who were heading toward retirement could find solace in fixed income returns. It provided holders with stable retirement income; they knew what their annual returns would be, and could budget and spend accordingly. Not anymore.

According to the Federal Reserve, in 2007, a $100,000 short-term CD (certificate of deposit) would have generated $4,780 in annual income. At the end of 2012, that same CD generated only $190.00 in annual income. Factor in inflation, and your investment actually lost money.

Even for those low-risk investors who are nearing retirement, there are still areas where you can park your money and beat the low interest rates offered by banks and other so-called “safe” investments (i.e. bonds, treasuries, CDs).

With the eurozone recession, sovereign debt, government spending, and geopolitical tensions, the U.S. economy—and the global economy for that matter—is expected to remain moribund with anemic growth.

With that in mind, many investors are turning their attention to financially strong companies with a long history of providing high-yield dividends.

Why are so many companies sitting on large stashes of cash? With the bull market nearing its fourth anniversary, many think it’s getting a little long in the tooth and is prime for a correction. Translation: many corporations are afraid to invest in this marketplace. And the best way to keep investors happy is to either return value in the form of a dividend or offer a share repurchase program. So here is one stock to think about:

National Retail Properties, Inc. (NYSE/NNN)

National Retail Properties, Inc. is a self-administered real estate investment trust (REIT) that acquires, develops, and manages freestanding retail properties in heavily traveled commercial and residential areas.

Its portfolio includes about 1,400 properties totaling more than 17.8 million square feet of leasable space across 47 states, concentrated in the Southeast, the Midwest, and Texas. These properties are leased to more than 300 tenants in 36 industry classifications.

National Retail Properties also invests in mortgages, operates the retail businesses on some of its sites, and develops properties with the intention of selling them for a profit. Convenience stores make up around one-quarter of National Retail Properties’ portfolio.

The company has a market cap of $3.6 billion, a forward price-to-earnings (P/E) ratio of 18.0, and $142 million in cash. The company also provides an annual dividend of five percent. National Retail Properties is one of only 104 (out of the more than 10,000 publicly traded companies) to have increased their dividends for 23 or more consecutive years.

The company announced that fourth-quarter revenues increased 21.8% year-over-year to $88.9 million. Fourth-quarter net income was up 38.0% at $35.9 million, or $0.32 per share. Full-year revenue was up 27.0% at $332 million; and net income for the year climbed 42.0% to $122 million, or $1.11 per share. (Source: “2012 Operating Results And Increased 2013 Guidance Announced By National Retail Properties, Inc.,” National Retail Properties, Inc. web site, February 7, 2013.)


Chart courtesy of www.StockCharts.com

Over the last four years, National Retail Properties’ share price has been bullish. Since the beginning of 2009, the company’s share price has climbed 158%. And the company’s share price remains bullish, trending along its 50-day moving average (MA).

Over the past two years, National Retail Properties has grown per-share results by 20%, while improving its balance sheet and maintaining very high occupancy levels. These results have perpetuated National Retail Properties’ elite 23-year record of increased annual dividends.

For 2013, National Retail Properties announced an increase in 2013 funds from operation (FFO) guidance from a range of $1.77–$1.81 to a range of $1.81–$1.85 per share before any impairment expense.

The FFO guidance equates to net earnings before any gains or losses from the sale of real estate of $1.09–$1.13 per share, plus $0.72 per share of expected real estate depreciation and amortization.

National Retail Properties is a financially solid company with a strong portfolio of retail properties. It continues to maintain a high occupancy level at 97.9%, with an average remaining lease term of 12 years. In fiscal 2012, the company invested $707 million in 232 properties, with an aggregate 2.9 million square feet of gross leasable area; it also sold 34 properties for $81.1 million, producing $11.0 million of gains on sales. The company has also increased dividends for the past 23 years.

Whether you’re risk-averse or have a higher risk tolerance, National Retail Properties is an option for investors looking to fortify their investment portfolio with a solid dividend yield (income) and capital growth.

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