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Public Storage (NYSE:PSA) increased its dividend in the first half of 2012, and currently pays a regular quarterly dividend that yields 3.0% annually. This Zacks #2 Rank (Buy) REIT had a solid third-quarter performance in November that has helped earnings estimates to rise.

With a steady dividend yield and an expected long-term FFO growth rate of around 6.2%, PSA appears to be a promising pick for investors seeking both growth and income.

Impressive Third Quarter Earnings

On November 8, Public Storage reported third quarter FFO per share of $1.73, topping the Zacks Consensus Estimate by 1.8% and the year-ago FFO by 34.1%. The healthy top-line growth was due to improved property operations and the impact of foreign currency translations.

On a year-over-year basis, revenues for Same Store Facilities advanced 4.8% to $412.6 million, thanks to higher realized annual rent per occupied square foot. Net operating income for Same Store Facilities increased 7.9% to $294.1 million.

Earnings Estimates Moving Higher

The Zacks Consensus Estimate for 2012 edged up 0.3% to $6.24 in the past 60 days, while the Zacks Consensus Estimate for 2013 increased 1.6% to $7.08. These outlooks suggest year-over-year growth of about 5.2% for 2012 and 13.5% for 2013.

Dividend Payment

Public Storage hiked its dividend by nearly 16% to $1.10 per share in the first half of 2012. The current dividend rate affirms an annual yield of 3.0%.

Premium Valuation

Shares of Public Storage currently trade at 20.7x 12-month forward earnings, a 29.4% premium to the peer group average of 16.0x. Its price to book ratio of 4.9 is at a significant premium to the peer group median of 1.8. Given its strong fundamentals, the premium valuation is justified.

Moreover, the company has a trailing 12-month ROE of 16.7% compared with the peer group average of 4.7%. This implies that the company reinvests its earnings more efficiently than its peer group.

Public Storage has been continuously outperforming the S&P 500 since mid-October, as well as its 200 days moving average, since the beginning of last month.

With rising earnings estimates, strong expected earnings growth and a decent dividend yield, Public Storage looks like an attractive growth and income pick.

Headquartered in Glendale, California, Public Storage is a real estate investment trust that was founded in 1971. The company acquires, develops, owns and operates self-storage facilities in the U.S. and Europe. As of September 30, 2012, the company had interests in 2,069 self-storage facilities located in 38 states in the U.S., and 189 storage facilities located in seven Western European nations. It also owns a 41% common equity interest in PS Business Parks Inc. (NYSE:PSB), which owns and operates commercial space, primarily flex, multi-tenant office and industrial space. The company has a market cap of about $25 billion. Other Zacks #1 Rank (Strong Buy) stocks in the industry include Arbor Realty Trust Inc. (NYSE:ABR).

Read the full Analyst Report on PSA (email registration required).

Source: Public Storage Is A Promising Pick For Growth And Income Investors