Deck the halls and break out the gingerbread… the holidays are here!
And even though stores have reopened for in-person shopping, my friends and loved ones have opted to send me their Christmas lists with nothing but links.
Needless to say, Amazon (Nasdaq: AMZN) delivery drivers have gotten to know my address pretty well.
I know I’m not alone… E-commerce is a booming business, and the pandemic has pushed it to all-time highs.
In 2021, U.S. consumers are expected to spend $933 billion on e-commerce – up 17% year over year. It’s a trend that’s expected to continue in the foreseeable future.
But Amazon and other online retailers need a place to store all these goods while they prepare them for delivery…
And the company we’re talking about today, STAG Industrial (NYSE: STAG), owns the fulfillment centers and industrial storage spaces that big e-commerce brands utilize. It carries a yield of 3.34%.
We previously ran STAG through SafetyNet Pro in the beginning of 2021, and it earned itself an “A.”
But now let’s revisit this name to see whether it’s truly a safe dividend for investors to jump into…
Fulfilling the Holiday Magic
STAG owns and operates more than 500 single-tenant, industrial properties across the United States. That includes fulfillment centers, storage units and other similar properties.
E-commerce is a huge portion of its business, and its biggest customer, Amazon, makes up around 4% of its revenue.
We’ve all seen how Amazon has flourished… especially over the last two years as consumers turned to online shopping over brick-and-mortar.
And STAG has flourished right alongside its big-name tenants…
This year, the company expects to make $357 million in funds from operations (FFO) – up 25% from $285.2 million in 2020.
FFO is the measure of cash flow that we use for real estate investment trusts (REITs).
In a consistent pattern, STAG’s FFO has grown year after year at a sizable rate.
The REIT has kept it consistent with its dividend as well, maintaining a decade of raising its payout without cutting.
The last time we talked about STAG, it had a payout ratio of 77.82% – down from 81% in 2019. But now STAG is estimated to have a payout ratio of 71% this year.
And like many other positives the company has going for it, this trend should continue as the business grows stronger and stronger every year.
E-commerce isn’t going away anytime soon – most retailers have been beefing up their online presence for years.
But STAG isn’t reliant on just the success of e-commerce… Brick-and-mortar stores require industrial space as well.
Whether it’s online or in-person retail, STAG has grounded itself as an integral part of this high-flying sector.
So if you’re looking to get a gift for yourself this year and put a little extra cash in your pocket, STAG is worth putting on your wish list.
Dividend Safety Rating: A
— Brittan Gibbons-O’Neill
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Source: Wealthy Retirement