Stumped for Valentine's Day this year? Gifting your significant other like royalty with shares of Essex Property Trust (ESS 0.57%) can be a good investment in your personal and financial futures.
Essex is a real estate investment trust (REIT) with a portfolio of about 250 apartment communities with about 60,000 units along the West Coast, focused on Southern California, the San Francisco Bay Area, and metropolitan Seattle.
The royalty part? Essex is a Dividend Aristocrat, an exclusive club of S&P 500 stocks that have increased their dividends every year for at least 25 years. In Essex's case, that's 28 straight years, growing from the quarterly payout of $0.08 per share it first paid in July 1994 to $2.09 per share it paid out last month.
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Essex stock is currently yielding about 2.5% from a share price of about $338, and it's raised its dividend by about 12.37% over the past three years. Meanwhile, a payout ratio of only about 50% based on its cashflow points to its ability to keep up that slow but steady growth characteristic of the best of breed among REITs. This is not a flashy growth stock, but a solid choice for a highly liquid real estate investment that should keep on giving for years to come.
Commitments to a double bottom line of doing good
Valentine's Day is also about commitment; it's worth noting here that Essex says it was the only multifamily REIT to increase its regular dividend during the Great Recession.
An investment in Essex can also make you feel good while you're doing good. The company is on Newsweek's list of "America's Most Responsible Companies 2022," ranking 105th out of 500 for its performance in ESG, or meeting environmental, social and corporate governance criteria. In fact, Essex completed development of its first sustainable-certified community back in 2009.
And as far as building toward a better future together, Essex recently added one apartment community to its portfolio at $53 million and two operating commercial properties for future apartment development, for $86 million.
Constrained supply in its markets helps make Essex an arrow in Cupid's quiver
That will add revenue in the long term for this proprietor of residential properties in markets where supply has been constrained for years and can reasonably be expected to continue that way. As Essex President and Chief Executive Officer Michael Schall said in his firm's third-quarter earnings announcement, "We remain cautiously optimistic that the West Coast is still in the early stages of the recovery with office reopenings and associated economic growth representing an additional catalyst for continuous rental demand."
That recovering demand should mean a steady flow of income that the REIT is bound by tax law to distribute the lion's share of to shareholders. That's the commitment Essex made when it became a REIT. You can show your own commitment to the target of your Cupid's arrow this Valentine's Day by showing them some love in the form of shares of this stock.
