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Public Storage's Dividend Analysis

An In-depth Look at Public Storage's Dividend Sustainability and Growth

Introduction to Public Storage's Upcoming Dividend

Public Storage (NYSE:PSA) recently announced a dividend of $3 per share, payable on 2024-06-27, with the ex-dividend date set for 2024-06-12. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Public Storage's dividend performance and assess its sustainability.

What Does Public Storage Do?

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Public Storage is the largest owner of self-storage facilities in the US with more than 3,000 self-storage facilities in 40 states and approximately 218 million square feet of rentable space. Through equity interests, it also has exposure to the European self-storage market through Shurgard Self Storage. The company also has a merchandise business, a third-party property management business, and an insurance business that offers products to cover losses for the goods in self-storage facilities.

Public Storage's Dividend Analysis
Public Storage's Dividend Analysis

A Glimpse at Public Storage's Dividend History

Public Storage has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Public Storage has increased its dividend each year since 1992. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 32 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Public Storage's Dividend Analysis
Public Storage's Dividend Analysis

Breaking Down Public Storage's Dividend Yield and Growth

As of today, Public Storage currently has a 12-month trailing dividend yield of 4.41% and a 12-month forward dividend yield of 4.41%. This suggests an expectation of the same dividend payments over the next 12 months. Over the past three years, Public Storage's annual dividend growth rate was 14.50%. Extended to a five-year horizon, this rate decreased to 6.00% per year. And over the past decade, Public Storage's annual dividends per share growth rate stands at 6.10%.

Based on Public Storage's dividend yield and five-year growth rate, the 5-year yield on cost of Public Storage stock as of today is approximately 5.90%.

Public Storage's Dividend Analysis
Public Storage's Dividend Analysis

The Sustainability Question: Payout Ratio and Profitability

To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-03-31, Public Storage's dividend payout ratio is 1.10, which may suggest that the company's dividend may not be sustainable.

Public Storage's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Public Storage's profitability 9 out of 10 as of 2024-03-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.

Growth Metrics: The Future Outlook

To ensure the sustainability of dividends, a company must have robust growth metrics. Public Storage's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Public Storage's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Public Storage's revenue has increased by approximately 15.40% per year on average, a rate that outperforms approximately 80.61% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Public Storage's earnings increased by approximately 19.40% per year on average, a rate that outperforms approximately 66.86% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 9.40%, which outperforms approximately 73.24% of global competitors.

Conclusion: Evaluating Public Storage's Dividend Prospects

Considering Public Storage's consistent dividend growth, robust profitability, and strong growth metrics, the company presents a compelling case for dividend investors. However, the sustainability of such dividends will depend on the company's ongoing ability to manage its payout ratio effectively and maintain its earnings growth. Value investors should monitor these factors closely to ensure that their investment continues to provide desirable yields. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.

This article first appeared on GuruFocus.