In my monthly Pulse articles, I rank all the stocks in DivGro, my portfolio of dividend growth stocks. I use an elaborate system to ranks stocks, using fundamental data from the CCC list and sources like Morningstar, finbox.io, Simply Wall St, and F.A.S.T. Graphs.
For several months now, STAG Industrial (STAG) was ranked at the bottom of all the stocks in my portfolio. The REIT earned only one star in my 7-star rating system.
On the other hand, STAG has been a great performer for DivGro. It yields 5% and pays monthly dividends, which are two reasons to like the STAG!
So why did I sell all my STAG shares?
The main reason is that STAG's dividend growth rate has been declining rapidly:
Furthermore, STAG's latest dividend increase takes the dividend only 1.47% above the year-ago payment:
So far, I've hesitated to pull the trigger on STAG because of its performance:
Source: finviz.com
However, STAG now trades about 8% above fair value, so I think it was a good time to part ways. Here is my assessment of STAG based on the analysis I performed for my latest pulse article:
| STAG Industrial, Inc (STAG) | • premium 8% | • rank #48 • ★☆☆☆☆☆☆ |
Both F.A.S.T Graphs and finbox.io agree that STAG is trading at a premium to fair value:
Trade Summary
| 2015-07-29 | Bought 140 shares of STAG at $18.94 per share: | $ | 2,651.58 |
| 2015-09-15 | Dividend on 140 shares at 11.50¢ per share: | $ | 16.10 |
| 2015-10-15 | Dividend on 140 shares at 11.50¢ per share: | $ | 16.10 |
| 2015-11-16 | Dividend on 140 shares at 11.50¢ per share: | $ | 16.10 |
| 2015-12-15 | Dividend on 140 shares at 11.50¢ per share: | $ | 16.10 |
| 2017-01-15 | Dividend on 140 shares at 11.50¢ per share: | $ | 16.10 |
| 2016-02-16 | Dividend on 140 shares at 11.58¢ per share: | $ | 16.22 |
| 2016-02-29 | Bought 100 shares of STAG at $17.70 per share: | $ | 1,770.00 |
| 2016-03-15 | Dividend on 140 shares at 11.58¢ per share: | $ | 16.22 |
| 2016-04-15 | Dividend on 240 shares at 11.58¢ per share: | $ | 27.80 |
| 2016-05-16 | Dividend on 240 shares at 11.58¢ per share: | $ | 27.80 |
| 2016-06-15 | Dividend on 240 shares at 11.58¢ per share: | $ | 27.80 |
| 2016-07-15 | Dividend on 240 shares at 11.58¢ per share: | $ | 27.80 |
| 2016-08-15 | Dividend on 240 shares at 11.58¢ per share: | $ | 27.80 |
| 2016-09-15 | Dividend on 240 shares at 11.58¢ per share: | $ | 27.80 |
| 2016-10-17 | Dividend on 240 shares at 11.58¢ per share: | $ | 27.80 |
| 2016-11-15 | Dividend on 240 shares at 11.58¢ per share: | $ | 27.80 |
| 2016-12-15 | Dividend on 240 shares at 11.58¢ per share: | $ | 27.80 |
| 2017-01-17 | Dividend on 240 shares at 11.67¢ per share: | $ | 27.80 |
| 2017-02-15 | Dividend on 240 shares at 11.67¢ per share: | $ | 28.00 |
| 2017-03-15 | Dividend on 240 shares at 11.67¢ per share: | $ | 28.00 |
| 2017-04-17 | Dividend on 240 shares at 11.67¢ per share: | $ | 28.00 |
| 2017-05-15 | Dividend on 240 shares at 11.67¢ per share: | $ | 28.00 |
| 2017-06-15 | Dividend on 240 shares at 11.67¢ per share: | $ | 28.00 |
| 2017-06-19 | Sold 240 shares of STAG at $27.66 per share: | $ | 6,638.27 |
Capital gain:
|
$
|
2,216.69
| |
Dividends received:
|
$
|
530.94
| |
Commissions/fees/taxes:
|
$
|
0.00
| |
Net gain:
|
$
|
2,747.63
|
I made a net gain of 62.1% on the original amount invested, or 38% annualized.
My investment in STAG has paid off nicely and I look forward to finding a suitable substitute trading below fair value!
Thanks for reading! Do you own STAG and have you considered selling your shares now that STAG is trading well above fair value? Or are you going to hang on and continue to collect the 5%+ yield? Please share your thoughts in the comments!
Hey FerdiS,
ReplyDeletetx for your thoughts on STAG. I think it was a good move, especially with the massiv capital gains. If you put that money to work at 5% your income will be higher again... i have STAG on my radar, but i couldn't convince myself to pull the trigger. One reason is that the percentage of REIT holdings in my portfolio is a little too high. I have to balance the portfolio first. But even than i think there are better REITs right now...
Regards,
DividendSolutions
Hi DividendSolutions -- thanks for sharing your thoughts. I would be curious to hear which REITs you think are better right now! I have SPG in mind, but I have yet to do my due diligence. WPC (I believe you own it) looks interesting, too. I already own O and OHI.
Deleteyes, i like WPC and think of adding to my position. The dividend-growth rat slowed down, but a yield of 6% is great, especially when you consider the rock solid dividend history of WP Carey. - Another REIT i llike is EPR Properties, because they operate in a different sector than my other REITs and not in the retail sector. But i have to dig deeper and do more research on EPR. - Welltower is the REIT in the healthcare sector i like a lot, cause they are not affected by gov. healthcare reforms and have a long solid dividend history. - O and OHI are good too and i own them...
DeleteThanks for sharing those tickers! I'll have a look.
DeleteT and VZ have dropped considerably recently. Might be a good time to take a second look at those. Great job on the investment!
ReplyDeleteThanks, ADD -- yes, I'll take a look at T and VZ. Love the dividends but dividend growth is "meh".
DeleteHey Ferdis,
ReplyDeleteLooks like you made a good move selling STAG. The fact of the matter is you can now put that Capital Gains to continue to work for you and so it's a win/win.
Hi, Dividend Portfolio -- you're right, I'm looking to invest in another REIT or higher yielding instrument and the capital gains will come in handy!
DeleteAwesome return on STAG. I can understand your reason for selling. The stock has performed quite well recently and why not cash in on that appreciation especially when the DGR has slowed a lot. I think there will be a time to add this stock again to a portfolio. Just have to wait for those shares prices to come down a bit. Thanks for sharing.
ReplyDeleteThanks, DivHut -- STAG worked well for me but it was time to move on. I know there are good reasons for the slowing dividend growth rate (STAG is reducing its payout ratio) and REIT will be better off in the future because of that. Not mentioned, but another reason for selling is if one looks at the so-called Chowder rule for high-yielding stocks: Yield + DGR > 12. For STAG: 5.1 + 1.5 = 6.6. Of course, I'm cheating by using the 1-yr DGR instead of the 5-yr DGR. But that's the direction STAG is trending to.
Delete