Recs

7

5-Star Stocks Poised to Pop: Government Properties

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, government office REIT Government Properties Income Trust (NYSE: GOV  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Government Properties and see what CAPS investors are saying about the stock right now.

Government Properties facts

Headquarters (Founded)

Newton, Mass. (2009)

Market Cap

$1.0 billion

Industry

Office REIT

Trailing-12-Month Revenue

$89.6 million

Management

President/CEO Adam Portnoy
CFO David Blackman

Trailing-12-Month Return on Equity

5.7%

Cash/Debt

$1 million / $117.9 million

Dividend Yield

6.2%

Competitors

Boston Properties (NYSE: BXP  )
Corporate Office Properties Trust (NYSE: OFC  )

Sources: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and Motley Fool CAPS.

On CAPS, 99% of the 85 members who have rated Government Properties believe the stock will outperform the S&P 500 going forward. These bulls include Motley Fool co-founder David Gardner (TMFSpiffyPop) and TMFDeej, both of whom are ranked in the top 1% of our community.

Just two weeks ago, David tapped Government Properties as a real way to make some income: "REIT with [little debt], rents space to the government (sadly, a growth market), 5-star CAPS, m'man Deej covering it, market-beater over past year, has solid characteristics including high and secure yield. Outperform."

True to its name, Government Properties leases properties primarily to government tenants, which tend to be less vulnerable to the business cycle, sign longer leases, and renew more often than other tenants. In fact, Government Properties' 99%-plus renewal rate is easily one of the highest in the REIT space. More importantly, with a debt-to-equity of 0.2 -- much lower than office REIT rivals Boston Properties (1.6) and Corporate Office (2.1), as well as other REIT alternatives like Simon Property (NYSE: SPG  ) (3.7) and Macerich (NYSE: MAC  ) (1.3) -- Government Properties looks relatively safe on the balance sheet, as well.

CAPS All-Star TMFDeej elaborates:

What is one of the main problem with the REIT sector? The high debt level that many of the companies that operate in that sector maintain. One doesn't have to look any farther than the recently well publicized problems that the mall giant General Growth Properties [ (NYSE: GGP  ) ] went through and its subsequent filing for bankruptcy to see that a real-estate crash, high debt levels, and REITs don't go well together.

Well, what if I told you that I have found a REIT that not only has practically no debt, but is a recent spin-off, and pays a dividend of over 6%? Sounds pretty good, huh?

The company that I am referring to is Government Properties Income Trust (GOV). This REIT was spun-off from [HRPT Properties] around a year ago. If only I had known about it then because the stock is up significantly since then. It still offers tremendous value. ...

All in all, Government Properties appears to be a relatively safe investment that provides investors with a high current yield and a number of catalysts that could eventually result in significant gains down the road.

What do you think about Government Properties, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Fool's disclosure policy always gets a perfect score.


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