Stag Industrial Inc (STAG)’s Big Dividend: A Unique Risk Worth Considering

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Another risk is simply the company’s concentration in the industrial real estate sector. For example, Stag describes this risk in the most recent annual report as follows: “Our investments are concentrated in the industrial real estate sector, and we would be adversely affected by an economic downturn in that sector.”

However, conditions in the industrial real estate sector are currently strong according to the SIOR Commercial Real Estate Index as shown in the following table.

In the Index, a value of 100 represents a well-balanced market for industrial and office property. Values significantly lower than 100 indicate weak market conditions; values significantly higher than 100 indicate strong market conditions. The current Industrial sub index value is 128.5, indicating strong market conditions.

Conclusion

Stag Industrial Inc (NYSE:STAG) appears healthy and growing, and its big dividend appears safe. The company is exposed to unique risks in the sense that it invests in single-tenant secondary/tertiary properties that other institutional investors often avoid. However, through diversification, Stag is able to eliminate much of the idiosyncratic risk. Further, the current market outlook for industrial real estate (according to the SIOR Commerical Real Estate Index) is strong. For these reasons, we’ve ranked Stag #10 on our list of top 10 Big Dividend REITs (Realty Income is ranked #9, read that article here). If you are a long-term income-focused investor, we believe Stag is worth considering.

Note: This article was written by Blue Harbinger. At Blue Harbinger, our mission is to help you identify exceptional investment opportunities while avoiding the high costs and conflicts of interest that are prevalent throughout the industry. We offer additional free reports and a premium subscription service at BlueHarbinger.com. If you are ever in the Naperville, IL, USA area, our founder (Mark D. Hines) is happy to meet you at a local coffeehouse to talk about investments. Please feel free to get in touch.

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