Money

Stuff Your Stocking With This 3.34%-Yielding REIT

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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

Dividend Grade Guide

If you have a stock whose dividend safety you’d like us to analyze, leave the ticker in the comments section below.

You can also see whether we’ve covered your favorite stock in Safety Net recently. Just click on the magnifying glass in the upper right part of the Wealthy Retirement homepage and type in the company name.

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