FILTER TIPS AND FINDING A FEW GOOD REITS
The “I Prefer Income” website and database programs provide focused information on income producing securities for Immediate Income and Dividend Growth Investors. Our motto is to “Rely on yourself investing” and our goal is to provide database programs of income producing securities that allow investors to quickly search for, identify and analyze stocks that meet their requirements for safety, yield and ability to pay a reliable and sustainable dividend.
This article and video will focus on 2 things:
- Discussing 2 important filter tips.
- Using the filter and ranking programs to find a few good higher yielding REIT stocks.
(* Please note that I highly recommend the video to get the best results from this article.)
Discussing 2 filter tips to improve filter searches
TIP #1: Did you ever notice that some companies show zero “0” 3-year dividend growth? As an example, in the REIT program, IRT, GOOD, WRE, AMH, DRH, APLE and others report 3-year dividend growth of 0 (zero). The reason they show 0 is because they have kept the dividend steady. They have neither increased or cut it. So if a company has paid .50 each quarter for the last 5 years, they will show a 0 dividend growth.
When you are doing a filter and you want to show 0 growth companies, you would enter: Dividend Growth = 0. If you want to see companies that have steady and/or increasing dividends, you would use the following: Dividend Growth >= 0
TIP #2: Did you ever want to search for stocks that had slightly negative earnings growth numbers to positive numbers? Or did you ever want to search for stocks that were slightly overvalued to undervalued stocks? This may sound confusing, but let me give you examples:
Valuation: Yield < +5 . This will locate stocks that are overvalued by 5% to all undervalued stocks. Valuation: Yield > -5 . This will locate stocks that are undervalued by -5% to all overvalued stocks.
Earnings Growth > -1 . This will locate stocks that have negative earnings growth greater than -1 to all positive earnings growth stocks
Dividend Growth > -1 . This will locate stocks that have negative dividend growth greater than -1 to all positive dividend growth stocks.
(* The video can show this better than I can explain.)
Ok, lets find a few good REIT stocks using the following criteria:
Yield > 5
Earnings growth > 0
Dividend Growth >= 0
Dividend Payout < .9 (based on Non-GAAP earnings) Debt to EBITDA < 6 Debt to Equity < 3.5 Valuation. Yield < +5 (this finds stocks that are slightly overvalued to all undervalued stocks) Here are the results. We started with 153 REIT stocks and narrowed the list to 5. (Table 1: Source, I Prefer Income)
The 5 stocks includes 2 stocks in the hotel industry and 3 in the retail industry categories.
Yields: Yields range from 5.2% with UBP to a high of 10.6% with SKT. Please note that APLE shows a 3-year dividend growth rate of 0, which means that it has maintained the same dividend of .10 every month for over 3 years. The other companies have increased their dividend with INN showing the highest growth of 9.54%.
Dividend Diamonds: There are 2 companies that have increased their dividend 5 or more years in a row. UBP has increased their dividend every year for 5 years and SKT has increased their dividend 26 years in a row.
Earnings Growth: All report positive earnings growth with the 2 highest being INN at 9.36% and UBP at 32.69%.
Payout Ratios: The table displays 2 payout ratios: “dividend to earnings payout” and “dividend to CFFO” (cash flow from operations). All companies show good payout ratios; however INN has the lowest and best ratios for both metrics with .56 for Dividend Payout and .49 to CFFO Payout.
Debt Ratios: There are 2 debt ratios in the table. Debt to EBITDA and Debt to Equity. SKT reports the highest (worst) for both ratios while APLE reports the lowest (best) for both.
Valuation: This metric shows if the stocks are over or undervalued based on the comparison of current yield to 10-Year median yield. Positive numbers indicate overvalued and negative indicate undervalued. UBP shows being slightly overvalued at 2.1%, while SKT is undervalued at -235.1%. Keep in mind that this is only based on the yield metric. To see 2 second metric, go to the database and click on the cells to see the results to see results for current price to non-gaap earnings vs the historic price to non-gaap earnings.
Using the Ranking Program to compare and rank
The results shown in Table 1 are very informative, but it is a good idea to take the process to the next level by using the Ranking program to compare and rank the 5 stocks. This program uses 5 different criteria and weights that the user selects to determine the best to worst stocks. There are 10 criteria to choose from, including:
- Earnings Growth
- Payout ratio
- Payout to CFFO
- Debt to EBITDA
- Debt to Equity
- Dividend Growth
- Yield – High
- Yield – Low
- Price to book value
- Price to Non-GAAP Earnings
Once the member has selected 5 from the list, they can then choose the weight for each. The total must equal 100. If you are defensive, you may want to select Payout and Debt ratios with the highest weights. If you are feeling a little more aggressive, you may want to place higher weights on Yield – High and dividend growth. The interesting thing about ranking is that it allows the user to define what is important to them. That can be challenging.
The video shows the results of the ranking criteria and weights that I selected. I think you will be surprised at the results. I hope you take a few minutes to view the video. It is well worth the time. The IPI program is a super program that helps each investor search for, identify, analyze and rank the stocks of interest. But always remember that regardless of the results, it is highly recommended to continue the research by viewing company earnings reports, guidance, SEC documents and any available articles.
I hope you find this article to be of value. Remember that the “I Prefer Income” programs are FREE and available to anyone that is interested in “relying on yourself investing”. Just go to here to register.
Here is the video
To go to the IPI Website, click here
I Prefer Income!