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Sun Communities REIT: Income And Great Total Return Play

Jul. 17, 2017 9:49 AM ETSun Communities, Inc. (SUI)AMT, BA, DLR, HD, HOG, JNJ, MO, OHI1 Comment
William Stamm profile picture
William Stamm


  • Sun Communities' total return overperformed the Dow for the 54.5-month test period by 75.80%.
  • Sun Communities' dividend is 3.1% and has been increased three of the last 10 years, and the dividend is well covered.
  • Sun Communities can continue its steady upward growth trend benefiting from the increasing demand for low-cost housing as the population increases.

This article is about Sun Communities (NYSE:SUI) and why it's a buy for the income and total return investor that that is being reviewed by The Good Business Portfolio guidelines. Sun Communities is a specialty real estate investment trust (REIT) in the manufactured housing sector.

Fundamentals of Sun Communities will be looked at in the following topics, The Good Business Portfolio Guidelines, Total Return And Yearly Dividend, Last Quarter's Earnings, Company Business Overview, and Takeaways And Recent Portfolio Changes.

Good Business Portfolio Guidelines.

Sun Communities passes 8 of 11 Good Business Portfolio Guidelines a poor score, a good score is 10 or 11. These guidelines are only used to filter companies to be considered in the portfolio. For a complete set of the guidelines, please see my article "The Good Business Portfolio: Update To Guidelines and July 2016 Performance Review." These guidelines provide me with a balanced portfolio of income, defensive, total return and growing companies that hopefully keeps me ahead of the Dow average. Some of the points brought out by the guidelines are shown below.

Sun Communities is a mid-cap company with a capitalization of $6.4 Billion. They are one of the largest companies in the manufactured housing business. This size will allow SUI the ability to buy and add smaller companies to continue its great long-term growth.

Sun Communities has a dividend yield of 3.1%, and its dividend has been increased for three of the last 10 years, not meeting my requirement for dividend growth. The payout ratio of FFO is high at 70% because of its REIT designation. Sun Communities therefore is a dividend income story as the demand for the manufactured housing continues to increase with the population growth.

Sun Communities income is great at $1.10/share FFO which leaves Sun Communities plenty of cash flow, allowing it

This article was written by

William Stamm profile picture
BSEE The Cooper Union, school of engineering 1966. Engineering manager Harris corp. 23 years Software development, Grumman Corp 10 years as project manager.26 years managing my own IRA accounts, in retirement now with a CAGR of 10.98%

Analyst’s Disclosure: I am/we are long BA, JNJ, HD, DIS, OHI, MO, HOG, DLR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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