Infrastructure

Why This May Be the Best Growth and Income Idea for Investors Now

Extra Space Storage

This top REIT has very solid upside potential for investors. Extra Space Storage Inc. (NYSE: EXR) is a fully integrated, self-administered and self-managed REIT headquartered in Salt Lake City, Utah. Like many self-storage companies, Extra Space offers rentable storage space offering customers conveniently located and secure storage units across the country, including boat storage, recreational vehicle storage and business storage.

As of the fourth quarter of 2020, the company owned or operated 1,971 self-storage stores in 40 states, the District of Columbia and Puerto Rico. The portfolio consists of approximately 149.2 million square feet of rentable space and 1.4 million units, making the company the second-largest owner/operator of self-storage stores and the largest self-storage management company in the country.

Unitholders receive a 2.72% distribution. The Stifel price target is $166, while the consensus target is $145.08. Extra Space Storage stock closed at $147.26 on Tuesday.

Life Storage

This more off-the-radar play looks solid for 2021. Life Storage Inc. (NYSE: LSI) is a self-administered and self-managed equity REIT that is in the business of acquiring and managing self-storage facilities.

Located in Buffalo, New York, the company operates more than 900 storage facilities in 30 states and in Ontario, Canada. It serves both residential and commercial storage customers with storage units rented by month. Life Storage consistently provides responsive service to approximately 500,000 customers, making it a leader in the industry.

One strong side of the company’s business uses its management expertise and brand name on facilities owned by other companies and receives a steady, predictable fee for its services. Life Storage currently manages 330 properties through this program, and 77 of them were added in 2020 alone.

In addition, Life Storage’s properties are concentrated in areas where population density and household income are above the U.S. average. Since 2010, Life Storage has increased its funds from operations (the REIT version of earnings) per share at a 9.3% annualized rate, and its dividend has grown nearly as fast.

Shareholders receive a 3.15% distribution. The $105 Stifel price target compares to a $95.70 consensus target. Tuesday’s final trade for Life Storage stock was reported at $94.01.

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