It’s often difficult for investors to find stocks that provide both appreciation and a high-yielding dividend. Often, the only reason for a high-yielding dividend is that the stock has declined significantly in share price.
But what if there was a stock that not only boasted a high-yielding dividend but also outperformed all of its peers over the past 52 weeks, achieving significant gains and distributing a monthly dividend?
Take a look at one real estate investment trust (REIT) that has crushed the competition over the past year, yet remains a high-yielding investment.
Modiv Industrial Inc. MDV is a Reno, Nevada-based, internally managed diversified REIT with 44 single-tenant net-lease properties totaling 4.9 million square feet across 16 states. Modiv has 39 industrial, four office and one retail property in a portfolio of 30 tenants. The portfolio has a 100% occupancy rate, an excellent weighted-average lease term (WALT) of 14 years and includes average annual rental increases of 2.5%.
Modiv Industrial was founded in 2015 and had its initial public offering (IPO) in February 2022. The original company name of Modiv Inc. was changed to Modiv Industrial Inc. in August to reflect its achievement of creating a portfolio with mostly industrial properties.
Modiv is a growing company but is still a relatively unknown micro-cap stock with a market cap of $113.7 million. The 52-week range is $10.01 to $19.12. Since its IPO, Modiv has aggressively acquired over $214 million of industrial manufacturing assets and sold off 10 office buildings and several retail properties.
The latest dispositions occurred in August, when Modiv sold 11 retail and two office properties to Generation Income Properties Inc. GIPR for $30 million in cash and $12 million of Generation Income’s preferred stock, with monthly dividends at a 9.5% annual rate.
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On Nov. 13, Modiv Industrial reported its third-quarter operating results. Adjusted funds from operations (AFFO) of $0.33 was in line with estimates and a 6.4% increase from AFFO of $0.31 in the third quarter of 2022. Revenue of $12.5 million beat the estimates of $12.04 million and was 21% above revenue of $10.21 million in the third quarter of 2022.
Another positive from the third-quarter report was that Modiv had a $10 million reduction in leverage and reduced its net debt to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from the previous quarter by 14%. Of its $285 million debt, 100% is now in fixed-rate loans with a weighted average interest rate of 4.52% and the earliest meaningful maturity starting in 2027. Modiv has also announced that future acquisitions will be made using cash rather than high-interest debt.
Modiv pays a monthly dividend of $0.0958 per share. The next dividend will be paid on Dec. 26 to shareholders as of Nov. 30, with an ex-dividend date of Nov.. 29. The annual dividend of $1.1496 yields 7.67%. The forward annual payout ratio of 87.7% is higher than one would like but is still manageable.
Another positive in recent months is that there have been several insider purchases of company stock. On Oct. 25, CEO Aaron Scott Halfacre showed his faith in Modiv by purchasing 203.42 shares of company common stock at $14.54. Halfacre has also purchased several hundred shares over the past few months, even as the price has risen. He now owns over 32,100 shares of company stock. Three other company insiders have also been buying shares In September and October.
On Nov. 15, B. Riley Securities maintained a Buy rating on Modiv and raised the price target from $17 to $18 per share. From its recent closing price of $14.98, that represents a potential gain of 20.1%.
Over the past 52 weeks, Modiv has had a total return of 53.49%, which makes it the No. 1-performing REIT in that time frame. It was also the No. 1-performing REIT during September.
Investors should not necessarily expect a similar performance from Modiv over the next 52 weeks, but this is one REIT that should continue to perform well while also providing investors with a high-yielding monthly dividend.
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