Public Storage (PSA), Extra Space Storage, Inc. (EXR), CubeSmart (CUBE): Why This Sector Has 2 Shining Stars for Investors

Compare these two superstars

Extra Space Storage, Inc. (NYSE:EXR) is a $4.6 billion company that continues to grow profitably and has the highest dividend yield, almost 4%. Inside Self Storage magazine recently recognized Extra Storage as the “Best Third-Party Management Company,” for the second year in a row. These 521 managed properties are also a built-in acquisition pipeline moving forward.

This past quarter, four properties totaling $48.3 million were added to the portfolio — and subsequent to the quarter ending June 30, 2013, two more properties closed for $9 million. Extra Space Storage, Inc. (NYSE:EXR) has an additional 37 properties located in eight states (including a 20 property portfolio in California) under contract for $305.3 million, all expected to close in 2013.

Public Storage (NYSE:PSA) has a fortress balance sheet and currently pays investors a $1.25 quarterly dividend, yielding over 3%. However, its $27 billion market cap makes a high growth rate much harder to achieve. That said, Public Storage expects to complete the purchase of 29 properties located in four states for $374 million during the quarter ending Sept. 30, 2013. It also has the infrastructure and a management team willing to grow by selectively developing new properties.

The current 94% occupancy level presents an opportunity to raise renewal rates. A profit margin north of 50% means those increases will show up on the bottom line. Since Public Storage (NYSE:PSA) has almost no debt, the second highest dividend yield in this sector is something investors can count on.

The bottom line

These two self-storage REIT superstars appear to be well positioned to continue to outperform for the next five years.

The article Why This Sector Has 2 Shining Stars for Investors originally appeared on Fool.com and is written by Bill Stoller.

Bill Stoller has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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