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Income Expert Sees Gains in "Store" at this REIT

05/17/2019 5:00 am EST

Focus: REITS

Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

We want to put some of our extra money back to work in Store Capital Corp. (STOR), one of the largest and fastest-growing net-lease real estate investment trusts in the nation, suggests Mark Skousen, editor of High-Income Alert.

Based in Scottsdale, Arizona, the REIT's senior management team has plenty of experience, including more than 30 years of investing in single-tenant real estate.

The trust has supplied more than $15 billion in mortgages and real estate transactions and now has a portfolio of more than 2,250 properties.

Store continues to innovate, offering business owners creative lease financing solutions. It specializes in sale-leasebacks. This is a financial transaction where a business sells an asset and then leases it back long-term.

Why would a company choose to do this?  It frees up capital with no restrictive covenants, provides financial flexibility, maximizes return on equity, reduces contractual payment obligations, offers extended renewal options and removes real estate valuation risk.

To see how popular this is becoming, look at Store’s financials. Revenue is growing 25% year over year. The trust enjoys a whopping 57% operating margin. And the stock is in a pronounced uptrend, up 30% over the last 52 weeks.

Investor’s Business Daily founder William O’Neill even has Store on his IBD 50 list of the top momentum stocks in the country. I expect earnings per share to hit $0.92 this year and rise to more than $1.25 in 2020.

And while you wait for the stock to move higher, you’ll be well paid. REITs are required to pay out at least 90% of their net income to shareholders in dividends. And since earnings are likely to push skyward in the year ahead, the dividend -- already ample at 4% -- is likely to rise, too.

A lot of stocks are taking it on the chin today, as the market is under pressure thanks to stalled U.S.-China trade talks.

Yet look at this REIT. It has hardly budged. Why? Because traders and investors know it is poised to move even higher. So, pick up Store Capital Corp.  at market. And place a sell stop at $27 for protection. 

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