Self-storage real estate investment trusts (REITs) have an excellent long-term track record. However, the pandemic shutdown, followed by the reopening of the economy, produced a boom and then a bust for self-storage operators.
The year-and-a-half decline for these REITs is over, and it’s time to add some self-storage to your portfolio.
Let’s take a look at REITs which to invest in…
Demand for self-storage exhibits nearly constant growth. Both individuals and businesses use self-storage when relocating, decluttering, or changing life circumstances.
Self-storage properties are inexpensive to build and have low operating costs. As a result, break-even comes at low occupancy rates, and as occupancy increases, profit margins can be very attractive.
The handful of publicly traded REITs own just 20% of the over 50,000 self-storage facilities in the U.S. This fact means there is plenty of opportunity to grow via acquisition as well as building new self-storage facilities.
There are only four publicly traded self-storage REITs. They range from a small $4 billion market cap up to the largest, with ten times the market value of the smallest. Here are the four stocks, from small to large, with some pertinent financial facts.
National Storage Affiliate Trust (NSA)
- Market cap: $3.96 billion
- Current yield: 6.8%
- Four-year average yield: 4.20%
- Years of dividend growth: 7
- Five-year average annual dividend growth rate: 14.25%
CubeSmart (CUBE)
- Market cap: $8.77 billion
- Current yield: 5.0%
- Four-year average yield: 3.84%
- Four-year average yield:
- Years of dividend growth: 10
- Five-year average annual dividend growth rate: 10.3%
Extra Space Storage, Inc. (EXR)
- Market cap: $27.90 billion
- Current yield: 5.09%
- Four-year average yield: 3.35%
- Years of dividend growth: 13
- Five-year average annual dividend growth rate: 14.16%
Public Storage (PSA)
- Market cap: $45.25 billion
- Current yield: 4.68%
- Four-year average yield: 4.33%
- Years of dividend growth: one
- Five-year average annual dividend growth rate: 6.58%
For a REIT, dividend growth propels share price appreciation. If you start with an above-average yield and continue growing dividends, these REITs can generate high teens annual total returns for the next three to five years.
