Top picks 2013: Gladstone Commercial
Conservative income investors can look to this risk-averse REIT for high yield.
Income investors are plagued by low interest rates and a dearth of reliable income sources. For this, we can thank the Federal Reserve, which has wrung interest payments out of the fixed-income market.
Fortunately, there is an investment that provides high-yield safe income: Gladstone Commercial Corporation (GOOD), a diversified commercial real estate investment trust.
Gladstone Commercial owns 77 properties covering 21 states from Rhode Island to Texas. Gladstone's portfolio is composed of commercial, industrial and retail properties.
Moreover, 98.8% of its portfolio's total square footage is occupied, and all tenants are current on their payments. As a REIT, Gladstone doesn't pay income tax at the corporate level.
This means more cash is distributed to investors. In fact, Gladstone's $1.50-per-share annual distribution yields 8.5% -- roughly four times the yield of the S&P 500.
Gladstone's average price-to-FFO (funds from operations) multiple of 11.5 is less than the industry average, but this is likely due to Gladstone's small size and lack of institutional following.
If the market yield were applied to Gladstone's 2011 FFO of $1.53, you'd be looking at a $23.50 share price -- a 30% increase to the current market price. In short, Gladstone is a valued-priced, risk-averse REIT that is a model of high-yield dependable income.
More from TheStockAdvisors.com
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
An interest rate tease in The Wall Street Journal sends the market into an optimistic tizzy -- but one that doesn't end quite at the top.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.