This preferred stock has a current annual dividend yield of 4.33%.
Public Storage (PSA-PK)
From Income Securities Investor
Public Storage, Inc. 4.75% Fixed Rate, Cumulative Preferred; Par 25.00; Call Date 12/20/24; Yield to Call 1.62%; Pay Cycle 3e; Exchange NYSE; Ratings, Moody’s A3, S&P BBB+; CUSIP 74460W578
Public Storage, Inc. (PSA) is a real estate investment trust (REIT) and the world’s largest owner and operator of self-storage facilities. Based in Glendale, California, the company has thousands of locations across the U.S. and Europe, with more than 170 million net rentable square feet of properties.
The REIT has demonstrated strong but conservative growth, with moderate debt leverage. Earnings and profitability measures have been sound, as confirmed by PSA’s solid credit ratings.
The public storage sector has largely escaped the major challenges posed by the pandemic and the economic downturn during 2020 and early this year. PSA reported 4Q 2020 funds from operations of $449.3 million or $2.57 per share. Core or adjusted funds from operations (AFFO) totaled $2.93 per share, beating analysts’ $2.85 estimates. AFFO benefited from improved occupancy and a modest increase in net operating income (NOI) from the prior-year 4Q period.
Square foot occupancy was 95.2% as of 12/31/20, up from 93.1% on 12/31/19, while NOI rose 1.3%. This preferred is fixed rate and callable on or after 12/20/24. Dividends are taxed as ordinary income, given the REIT’s tax status.
This issue’s solid investment grade ratings—plus PSA’s strong credit metrics—make it a suitable investment for low-risk tax-deferred portfolios. Buy at $28.00 or below for 1.37% yield to call.
Martin Fridson, CFA, Income Securities Investor, isinewsletter.com, 800-472-2680, May 2021