The combination of high dividend yield and double-digit growth can really make investors hungry for a stock. That's been the case with real estate investment trust (REIT) EPR Properties (NYSE:EPR), which recently set a new two-year-plus high in its share price. 

EPR certainly has a lot of momentum behind it, but as always in such situations, we need to evaluate whether the run-up in price has made it overvalued. Here's what I think.

AMC theater in EPR's portfolio

AMC movie theater in EPR's portfolio. Image source: EPR Properties.

An entertaining stock

It's not only the stock and fundamental performance that have set EPR apart. The company is unique among REITs, even among its retail peers. Its stated goal is to concentrate "our unique knowledge and resources on select underserved real estate segments which provide the potential for outsized returns."

For the company, this currently means entertainment, recreation, and education properties -- an eclectic mix, to say the least. Entertainment for EPR generally equates to cinema multiplexes. Recreation, meanwhile, covers facilities like golf entertainment complexes and ski areas. Finally, education includes public charter and private schools, plus early-childhood education centers. All told, the company had 391 properties at the end of 2018. 

The portfolio breakdown among the three segments was 44% entertainment, 32% recreation, and 21% education; 3% fell into the "other" category.

There isn't obvious synergy between education and the other two categories (although I'd say education is a more recession-proof sector). Regardless, this strange brew seems to be working very well for EPR. Occupancy at the entertainment properties has been very close to 100%, recreation is also doing well, and education isn't a typical niche for REITs, so this one might still have its pick of assets in the segment.

EPR's recently released fourth-quarter and full-year 2018 results seem to confirm the viability of the offbeat portfolio. The company showed substantial improvements in key metrics for both periods, not least a 22% year-over-year increase in total revenue for the latter period, and a 23% rise in adjusted funds from operations (AFFO).

Still a bargain?

EPR is girding itself for a more modest year in AFFO terms. Within its set of recent results it guided for AFFO of $5.30 to $5.50 for this year, which would land below the $5.51 it earned in 2018. The good news is that this will be at least partially due to a notable increase in planned investment spending on assets -- the company anticipates shelling out $600 million to $800 million for the purpose, up from 2018's $572 million.

Meanwhile, let's make a quick and dirty valuation. Taking the 2018 AFFO result and mashing it against the current stock price gives us a result of just over 13. 

Let's put this and other crucial EPR metrics in front of another company that -- similar to EPR -- distributes a monthly dividend, traditional retail REIT Realty Income (NYSE:O). We'll also place it against a pair of REITs from outside the retail sphere, industrial properties specialist STAG Industrial (NYSE:STAG) and the self-descriptive Public Storage (NYSE:PSA):

REIT Price/AFFO per Share 5-Year Annual FFO Growth Current Annual Dividend Yield
EPR 13.3 61% $4.50 6.1%
Realty Income 21.6 41% $2.71 3.9%
STAG Industrial 15.4 200% $1.43 5.2%
Public Storage 19.8 40% $8.00 3.8%

Data sources: Yahoo! Finance, YCharts, Realty Income, STAG Industrial, Public Storage.

On the whole, EPR looks attractive compared to its peers. It leads Realty Income, STAG Industrial, and Public Storage in both trailing 12-month price/AFFO terms and that favorite yardstick of many REIT investors, dividend yield. We should keep in mind that that EPR's yield is still meaty even after the recent advancement in share price.

So to me, EPR shares still have value despite that run-up. But your ultimate view on its potential depends on what you think about its asset mix. It's a weird one; however, I agree with my fellow Fool Matthew Frankel that entertainment/recreation facilities fit in with the current consumer trend of "experiences over possessions."

Therefore EPR's occupancy should remain high, and rent payments will likely continue to flow. Many Americans are also open to alternative education possibilities, which bodes well for that side of EPR's business.

Ultimately, then, I'd be bullish on EPR stock. I wouldn't be surprised if it notches a new stock price high before long.