Inflation is still running hot, so it’s still important to target investments that generate high levels of income. And even better, right now we have an opportunity for a double-whammy win – high dividends coupled with stock prices on the rise.

We’ve talked before about real estate investment trusts (REITs) and why I like them so much. As a reminder, they’re required to distribute 90% of their taxable income to shareholders annually in the form of dividends and tend to have very steady income streams, either leasing to tenants of the properties they own or holding onto loans backed by real estate.

And the pick I have for you today has some serious tenants – companies like Amazon and Netflix – in some of the fastest-moving economic sectors in the country. It combines a steady dividend with serious upside potential, and I think it’s a must-have for any inflation-beating portfolio.

Why Kilroy Realty Is a Perfect Buy Right Now
Kilroy Realty Corp (KRC) is a leading U.S. landlord and developer with operations in San Diego, Greater Los Angeles, the San Francisco Bay Area, the Pacific Northwest, and Austin, Texas.

The company leases to some of the world’s leading technology, entertainment, life science, and business services companies, including Amazon, LinkedIn, Netflix, Adobe Systems, Salesforce, DoorDash, and Synopsys.

In short, KRC leases to some of the biggest tech companies in the country’s largest tech-friendly urban centers.

As of September 30, 2022, Kilroy’s stabilized portfolio totaled approximately 16.2 million square feet of space (primarily office spaces and life sciences facilities) that are 90.8% occupied and 92.6% leased. The company also had more than 1,000 residential units in Hollywood and San Diego, with a quarterly average occupancy of 93.5%.

Additionally, the company has one in-process life science redevelopment project with an estimated redevelopment cost of $25.0 million, totaling approximately 52,000 square feet. They also have three in-process development projects with an estimated $1.7 billion investment totaling about 1.7 million square feet of office and life science space.

On October 25, 2022, the company reported Q3 2022 results, including revenue of $276.0 million, up 19% year-over-year.

On the bottom line, net income available to common stockholders was $79.8 million, or $0.68 per diluted share, including a $0.15 per share gain on the sale of an operating property, as compared to $47.0 million, or $0.40 per diluted share for the quarter ended September 30, 2021.

And funds from operations available to common stockholders and unitholders (“FFO”) of $139.7 million, or $1.17 per diluted share, an increase of approximately 20% as compared to $116.0 million, or $0.98 per diluted share for the quarter ended September 30, 2021.

Regarding the company’s balance sheet, the company finished Q3 2022 with approximately $1.6 billion of total liquidity comprised of roughly $330 million of cash and cash equivalents, $200 million available under the new unsecured term loan facility, and full availability under the $1.1 billion unsecured revolving credit facility. The company has an investment-grade credit rating with approximately 95% unsecured debt and no significant debt maturities until December 2024.

And, at the current price, KRC pays a 5.38% dividend.

So, if you’re looking for solid income with significant upside potential, I like KRC!

Have a great week.

— Shah Gilani

Source: Total Wealth