EPR Properties: 5.9% Yield, Monthly Dividend Income

The easiest (and perhaps most useful) valuation method for real estate trusts it to simply consider their dividend yields. By comparing EPR’s current dividend yield to its historical average, we can get a sense of the REIT’s current valuation. EPR Properties currently pays a monthly dividend of $0.34 per unit, which yields 5.9% on today’s stock price of $69.44. The following diagram compares EPR Properties’ current dividend yield to its historical average.

EPR Properties Dividend Yield History

Source: YCharts

Based on the above diagram, the current dividend yield of EPR Properties is roughly in-line with its historical averages. Thus, it is unlikely that valuation changes will have a material effect on this stock’s expected total returns. With that said, EPR’s current dividend yield is very attractive and will be a boon to investor returns. Further, it is highly likely that the REIT will continue to grow its payout over time. The trust has compounded its payout at ~7% per year over the last several years.

EPR Properties Annual Dividends

Source: EPR Properties Investor Presentation, slide 45

The remainder of EPR’s shareholder returns will be caused by growth in the company’s earnings power as measured by funds from operations (FFO) per unit. Since 2012, EPR has grown its FFO/unit by approximately 7% per year, on average. The REITs growth may moderate slightly as it grows in size. I conservatively expect FFO/unit growth of about 5%-7% per year (on average) moving forward.

Altogether, the expected total returns for EPR shareholders will be composed of:

  • 5.9% dividend yield
  • 5%-7% growth in funds from operations per unit (on average)

For total expected shareholder returns of 10.9%-12.9% per year, before accounting for changes in the REIT’s valuation.

Final Thoughts

EPR Properties looks to be a very attractive investment right now. The REIT has a dominant position in the ownership of movie theaters, golf courses, ski hills, and educational institutions. These are relatively small sub-segments of the real estate industry, and give EPR the benefit of being ‘a big fish in a small pond.’ EPR Properties is also very shareholder-friendly. The company’s 5.9% dividend yield and monthly dividend payments are very attractive for investors seeking current income. Based on all these factors, EPR Properties appears to be an excellent choice for either income investors or total return investors that are looking for some exposure to the real estate industry.

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