Hot Profits in Cold Storage

09/21/2020 5:00 am EST

Focus: REITS

Mike Larson

Editor, Weiss' Safe Money Report

I am adding another higher-yielding stock position to our Dynamic Income portfolio: AmeriCold Realty Trust (COLD) is the largest real estate investment trust (REIT) involved in the storage and distribution of food, notes Mike Larson, editor of Safe Money Report.

As of the second quarter, the company owned and operated 183 temperature-controlled warehouses with more than 1 billion cubic feet of storage.

All told, AmeriCold serves roughly 2,500 producers, distributors, retailers and e-tailers of everything from fruits and vegetables to meat, dairy and packaged foods. In the same quarter, revenue rose 10% to $482.5 million, while net operating income rose 6% to $128.3 million.

Acquisitions, growth in the same-store portfolio and elevated retail activity helped results. Adjusted funds from operation didn’t rise as much as forecast due to the payment of special COVID-19-related “appreciation bonuses” to employees. But that’s a short-term, one-off issue.

With more companies looking to outsource their logistics operations to cut costs and boost efficiency ... and more consumers ordering food and other temperature-controlled products online ... AmeriCold has a bright long-term growth outlook.

AmeriCold just earned an upgrade to “Buy” territory by our Weiss Ratings system. It currently pays a quarterly dividend of 21 cents per share, good for an indicated yield of 2.2% at recent prices. And its chart looks attractive, with a recent upside breakout followed by a consolidation period where fresh support held firm.

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