There are many ways to earn passive income. An easy way for beginners is to invest in high-quality dividend-paying stocks.
EPR properties (NYSE: EPR) stands out among dividend stocks as a great option for those seeking passive income. The real estate investment trust (REIT) pays one monthly dividendas opposed to the standard quarterly payout, and offers a very attractive dividend yield of more than 7%. For comparison: the S&P500 yields less than 1.5%. Here are some other features that make it an ideal option passive income.
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EPR Properties is a unique REIT. It focuses on owning experiential properties such as cinemas, attractions and experiential accommodations. It leases these properties to tenants who operate these experiences. These leases provide the REIT with relatively stable rental income that it uses to pay dividends.
The REIT currently yields more than 7%. At that rate, it could turn a $1,000 investment into more than $70 in annual dividend income, or almost $6 per month. The more you invest, the more dividend income you receive to stand collect every month.
That high-yield dividend is on a very sustainable basis. EPR Properties expects to generate between $4.80 and $4.92 per share in operating funds (FFO) as adjusted this year. That’s about 3.2% higher than the middle of last year. With the current annual dividend rate of $3.42 per share, the REIT has a comfortable yield dividend payout ratio of approximately 70%. That gives the country a nice cushion, while at the same time allowing it to retain a decent amount of cash to finance new income-generating investments.
EPR Properties also has a solid financial position. It has investment-grade credit backed by a low leverage ratio and primarily long-term, fixed-rate debt. It ended the third quarter with $35.3 million in cash on the balance sheet and just $169 million outstanding on its $1 billion credit facility, having recently paid off a $136.6 million debt repayment.
EPR Properties is steadily improving and expanding its income-generating experiential real estate portfolio. The REIT invested $82 million in the third quarter expenditure $52 million to purchase a fitness and wellness property in Colorado. That brought the total to date to $214.6 million, which is also included expenditure on experiential, tailor-made development and redevelopment projects. The company expects capital expenditures this year to be between $225 million and $275 million.
