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Extra Space: Unlocking the Secret Sauce behind Its Growth

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Part 4
Extra Space: Unlocking the Secret Sauce behind Its Growth PART 4 OF 7

Extra Space Storage—Highest Stock Price Return among REITs

Stock price performance

Extra Space’s (EXR) stock price has risen from $12.77 in 2008 to $83.80 in January 2018. It has been one of the best performers among REITs as well as in its sector.

EXR has returned 705.4% in the past ten years. Among the other top-performing REITs, Sun Communities (SUI), National Health Investors (NHI), Equity LifeStyle (ELS), and Digital Realty Trust returned 531.4%, 380.5%, 359.7%, and 328.6%, respectively.

Among its sector competitors, Public Storage (PSA) returned 265.6%, Life Storage (LSI) returned 175.9%, and CubeSmart (CUBE) returned 168.2%.

Extra Space Storage—Highest Stock Price Return among REITs

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Dividends

EXR’s quarterly dividend has five-year total growth of 680.0%. It paid total dividends of $1.45 in 2013, $1.81 in 2014, $2.24 in 2015, $2.92 in 2016, and $3.12 in 2017.

EXR has a payout ratio of ~100.7%. Its expected dividends in 2018 and 2019 are $3.47 and $3.70, respectively.

Dividend cyclicity

Extra Space has a healthy dividend payment history. However, it is not immune to cyclicity and is dependent largely on how the economy is performing. During the economic crisis of 2008–2009, it was forced to reduce its payout.

EXR paid a dividend of $0.25 in 1Q09 and skipped the payment in 2Q09 and 3Q09. It slashed the dividend payment to $0.13 in 4Q09, and it paid a dividend of $0.10 per quarter in 2010, a cut of ~60%.

In 2012, EXR regained its previous high. The main cause of this decline was the low occupancy rate of 81.1% compared to 94.0% in 2017 and high leverage during the economic crisis.

EXR comprises ~2.0% of the PowerShares S&P 500 High Dividend Low Volatility Portfolio ETF (SPHD).

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