Easterly Government Properties: 8% Dividend Yield And Increased Investment Activity; Potential Attractive Opportunity

(11min)

Summary

  • Easterly Government Properties benefits from anticipated lower interest rates, enhancing their growth potential and investment activity, despite an elevated payout ratio above 100%.
  • With increased investment activity, the REIT may be able to cover its dividend in the near to medium term.
  • Recent acquisitions, including major government-adjacent acquisitions to investment-rated companies like Northrop Grumman, and a solid balance sheet position DEA for potential upside, along with a strong pipeline of future deals.
  • Despite a recent 12% share price rally and attractive 8% dividend yield, their elevated payout ratio remains a concern, preventing me from upgrading DEA from hold to buy.
  • DEA's valuation is attractive, trading below peers with a P/FFO multiple of 11.4x, suggesting potential for further upside if interest rates decline as expected over the next year.
  • If Easterly Government Properties can continue to execute on making accretive acquisitions, particularly with investment-rated tenants, as well cover the dividend, they stand to see an increased likelihood of further share price appreciation, making them a potential attractive investment opportunity.
  • Looking for more investing ideas like this one? Get them exclusively at iREIT®+HOYA Capital. Learn More »

Real estate investment trusts REITs investing is shown on the business photo

Andrii Dodonov

Introduction

It's no secret that anticipated lower interest rates are likely to provide tailwinds for REITs going forward. Ahead of the FED meeting on September 18th, many are expecting a 25 basis points rate cut, which, I think, is highly likely. If so, REITs



This article was written by

6.43K Followers

Contributing analyst to the iREIT+Hoya Capital investment group. The Dividend Collectuh is not a registered investment professional nor financial advisor and these articles should not be taken as financial advice. This is for educational purposes only and I encourage everyone to do their own due diligence. I'm a Navy veteran who enjoys dividend investing in quality blue-chip stocks, BDC's, and REITs. I am a buy-and-hold investor who prefers quality over quantity and plans to supplement his retirement income and live off dividends in the next 5-7 years. I aspire to reach and help the hard working, lower and middle class workers build investment portfolios of high quality, dividend-paying companies. I also hope to give investors a new perspective to help them reach financial independence.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.

Recommended For You

About DEA Stock

SymbolLast Price% Chg
EPS
PE
Div Rate
Yield
Short Interest
Market Cap
Volume
Compare to Peers

More on DEA

Related Stocks

SymbolLast Price% Chg
DEA
--