EPR Properties: A High-Yield Stock Worth Considering

Investors eyeing dividend stocks might find EPR Properties appealing. The 7.7% yield, coupled with plans for business turnaround, suggests potential for growth despite risks. EPR Properties' dividend is returning, making it an intriguing choice for those willing to embrace some uncertainty.

Date: 18-01-2025

AI Rating: 5

EPR Properties' Dividend Outlook
EPR Properties has resumed and even increased its dividend following the pandemic-related suspension. Currently, it boasts a 7.7% dividend yield which indicates that it may appeal to risk-tolerant investors. The return of the dividend in 2021 and its subsequent increases suggest a positive trajectory, despite being below pre-pandemic levels.

Funds from Operations (FFO)
In the third quarter of 2024, EPR Properties reported adjusted funds from operations (FFO) of $1.29 per share, a decline from $1.47 in the previous year, signaling a decrease in profitability. However, it had increased from $1.20 in the prior quarter, indicating potential recovery. The adjusted FFO for the first nine months of 2024 was $3.61 compared to $4.07 the previous year. The company's payout ratio at 66% is in a reasonable range for a REIT, suggesting dividend payments are sustainable for now.

Portfolio Performance
Currently, 64% of EPR Properties' portfolio shows improvement relative to pre-pandemic levels with an enhanced rent coverage ratio, indicating strong performance. Conversely, the remaining 36% related to movie theaters shows a decline, with a coverage ratio dropping from 1.7x to 1.5x. Management is aware of the issues within this segment and is actively working to mitigate risks by reducing exposure to the struggling theater properties. This division illustrates a proactive approach, which is a positive signal to investors regarding long-term strategic planning.

Conclusion
While EPR Properties presents attractive investment opportunities through its high dividend and strategic changes, notable risks remain due to its dependence on the theater segment and fluctuating financial indicators. Investors should weigh these factors carefully.

Stocks: EPR