Dividend stocks have the potential to be highly enriching investments. According to data from Ned Davis Research and Hartford Funds, over the past 50 years, companies that pay dividends have outperformed those that don't by over 2-to-1. Dividend-paying stocks boast an average annual total return of 9.2%, compared to just 4.3% for non-payers. Furthermore, dividend growers achieve even higher returns, averaging 10.2% annually. This translates to significant long-term gains as investors can double their investments roughly every seven years at such a rate.
A standout example of a promising dividend stock is EPR Properties, offering investors a path to a potentially enriching future. EPR Properties focuses on experiential real estate, including movie theaters and recreational venues. As a real estate investment trust (REIT), EPR Properties owns 352 locations across the nation, rented out to more than 200 tenants. These leases provide EPR with a steady income stream, making the REIT a reliable investment option. This year, EPR anticipates generating adjusted funds from operations (FFO) between $4.80 and $4.92 per share.
Offering a generous monthly dividend of $0.285 per share, equating to $3.42 annually, the company maintains a reasonable payout ratio of around 70%. This figure offers room for flexibility while allowing sufficient cash flow reserves for future investments. At the current share price, EPR's dividend yields an impressive 7.5%, significantly higher than the sub-1.5% yield of the S&P 500. Consequently, a $1,000 investment in EPR can earn approximately $75 in dividend income annually compared to less than $15 from an equivalent investment in the S&P 500 index.
Over the years, EPR Properties has strategically invested $6.9 billion in building its real estate portfolio, yet this is merely a fraction of its market potential. The company identifies a $100 billion addressable market within the experiential real estate sector, targeting diverse property types such as entertainment venues, ski resorts, cultural sites, and wellness centers. This year, EPR has injected $214.6 million into experiential properties, including the acquisition of an attraction property for $33.4 million, $89.6 million in financing, and additional funds for development, redevelopment, and joint ventures.
With planned investment spending between $225 million and $275 million this year and an additional $150 million committed for future projects, EPR is poised for growth. These investments will bolster cash flow and facilitate dividend increases. EPR is on track to boost its adjusted FFO by 3.2% per share this year and has already increased its dividend by 3.6%. The REIT targets annual adjusted FFO growth of 3% to 4%, supporting potential dividend hikes at a similar rate.
EPR's growth prospects are supported by ample liquidity and post-dividend free cash flow, finishing the third quarter with $35.3 million in cash and only $169 million outstanding on a $1 billion credit facility. EPR continues to recycle capital by profitably selling non-core and vacant properties, facilitating accretive reinvestment. The REIT's slight educational segment, comprising early childhood and private schools, may also be sold to boost future initiatives.
With a combination of robust dividend yield and steady earnings growth, EPR Properties represents an attractive investment proposition. CEO Greg Silvers emphasized this during a recent earnings call, stating, "We can still comfortably grow in that 3% to 4% range with what we're doing. And combine that with our dividend, it's still what we think a very attractive double-digit kind of total shareholder return." An investment in EPR Properties offers a promising outlook for a more financially rewarding future.
