Public Storage: Preferred Shares Offer 6%+ Returns

(7min)

Summary

  • Public Storage's preferred equity offers a well-covered 6.1% yield, making it attractive for income-focused investors given the low payout ratio versus FFO.
  • The REIT's preferred dividends are well-covered, needing only 6.3% of Core FFO, with a substantial common equity cushion of over $5 billion.
  • Series F preferred shares, trading at $20.99, offer a 6.13% yield with potential for capital gains if interest rates decrease.
  • All series of preferred shares rank pari passu; I would choose the one with the highest current yield if initiating a position.
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View of the Shurgard Self Storage, Amsterdam Amstel, Company facility building.

sfe-co2/iStock Editorial via Getty Images

Introduction

Public Storage (NYSE:PSA) is one of the largest REITs focused on self-storage activities. The REIT owns almost 3,400 self-storage facilities in the USA for a total of 245 million net rentable square feet.

The common shares are pretty expensive, but

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This article was written by

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The Investment Doctor is a financial writer, highlighting European small-caps with a 5-7 year investment horizon. He strongly believes a portfolio should consist of a mixture of dividend and growth stocks.

He is the leader of the investment group European Small Cap Ideas which offers exclusive access to actionable research on appealing Europe-focused investment opportunities not found elsewhere. The a focus is on high-quality ideas in the small-cap space, with emphasis on capital gains and dividend income for continuous cash flow. Features include: two model portfolios - the European Small Cap Ideas portfolio and the European REIT Portfolio, weekly updates, educational content to learn more about the European investing opportunities, and an active chat room to discuss the latest developments of the portfolio holdings. Learn more.

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.

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