Forbes Dividend Investors received this hotline on January 13.
Gas station ownership provides a reliable stream of income, one that has allowed Jericho, N.Y.-based Getty Realty Corp. (GTY) to pay 17 years of uninterrupted dividends since December 1995. As a bonues, those dividends have been rising sharply of late, and the real estate investment trust trades at significant discounts to historical valuations, making now an attractive time to buy.
Founded in 1955, Getty owns, leases and finances retail fuel and convenience stores and petroleum distribution terminals in 21 states with most in the Northeast and the Mid-Atlantic regions. Getty owns 891 of the 1,016 properties and has long-term leases on the other 125. Besides Getty, brands represented in the portfolio include BP, Exxon, Mobil, Shell, Chevron, Valero, Fina and Aloha. The retailers managing the operations and pay taxes, maintenance and repair costs, insurance and other additional expenses.
Getty (Photo credit: Joe Shlabotnik)
The bottom line is expected to grow by 54% to $1.53 per share for the year ended Dec. 31, 2013, even though revenue is expected to dip by 4.7% to $97.4 million. Analysts look for sales to increase by 6.4% this year and for earnings to come in at $1.33 per share.
Getty pays a quarterly dividend of $0.20 per share, up from $0.125 in 2012. The company had cut the payout from $0.25 in 2011 and $0.48 in 2010. With Getty on a pace to crank out $1.45 in modified funds from operation, there is plenty of room for the dividend to keep on growing.
Discounted valuations to historical multiples of earnings, book value and sales make the REIT look attractive. On book value, the discount is 38% to its five-year average multiple. Getty's average price-to-sales ratio since 2008 has been 6.76. Applying that to $3.18 per share in sales over the past 12 months produces a $49.77 stock price.
John Dobosz is editor of Forbes Dividend Investor. Click here for a 30-day trial subscription.
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