Market value: $4.1 billion
Dividend yield: 7.3%
Industry: Entertainment and education real estate
While most real estate investment trusts specialize in broad asset classes such as apartments or office buildings, EPR Properties (EPR, $56.13) has a very specific niche, focusing mostly on entertainment. In fact, EPR is an abbreviation for “Entertainment Properties.”
EPR’s holdings include a wide range of non-traditional assets, including movie theaters, ski areas, golf driving ranges and charter schools. Its largest tenants include major theater chains like AMC Entertainment (AMC) and Cinemark (CNK), popular golf chain TopGolf and ski resort operator Peak Resorts (SKIS).
EPR does have an issue in that its properties tend to be highly specialized and hard to repurpose. What, exactly, would you do with a TopGolf driving range if that company were to unexpectedly far on hard times?
But at the same time, EPR’s management has proven its talent in finding accretive deals in this specialized space, and the stock is priced to more than adequately compensate for these risks. At current prices, EPR yields an attractive 7.3%, and the REIT has historically raised its dividend by a little more than 6% per year. That’s well in excess of the rate of inflation.
To put that in perspective, more mainstream triple-net REITs like Realty Income (O) and National Retail Properties (NNN) yield 5% and 4.8%, respectively. So EPR’s quirkiness really does translate into a higher yield – which is exactly what you want.
