Getty Realty Stock: Bullish 5%-Yielder Hikes Dividend for 10 Straight Years
March 2, 2023
GTY Stock Up 25% in 2023
Dividend hogs love companies that pay ultra-high-yield dividends. But, with the risk/reward trade-off, many high-yield dividend stocks struggle to provide shareholders with reliable capital appreciation. The key is finding stocks with the perfect balance.
One company that fits the bill is Getty Realty Corp. (NYSE:GTY). It’s the leading publicly traded, net-lease real estate investment trust (REIT) in the U.S. that specializes in the acquisition, ownership, leasing, financing, and redevelopment of convenience stores, gas stations, and other single-tenant, automotive-related and retail real estate (e.g., car washes, auto service centers, and auto part retailers).
Getty Realty stock’s long-term returns have been outstanding. Not only have GTY stock’s dividends risen for 10 consecutive years, but its share price has also been crushing the market.
Since the start of 2015, Getty Realty Corp.’s quarterly dividends have increased by 119% from $0.196 to $0.43. Over the same time frame, Getty Realty stock’s price has soared by about 85%. Over the last year, GTY stock’s price has gone up by about 22%. Over the last six months, it has risen by about 13%. Year-to-date, it has climbed by less than one percent.
As you can see in the chart below, however, Getty Realty stock took a big hit during the COVID-19 pandemic. That’s not a big surprise; the entire market took a dive during that period.
GTY stock’s return to its former glory took a little longer than it did for the overall stock market. That’s despite reporting solid financial results throughout (and since) the pandemic. Perhaps investors weren’t fully prepared to trust Getty Realty Corp.’s performance during the worst economic crisis in 100 years.
Their fears were mislaid.
Chart courtesy of StockCharts.com
About Getty Realty Corp.
As of this writing, Getty Realty’s $2.3-billion real estate portfolio includes 1,039 properties in 38 U.S. states and Washington, D.C. The majority of the properties (72%) are convenience stores and gas stations. They’re followed by car wash (13%), legacy gas and repair (11%), auto service (three percent), drive-through (one percent), and auto part (less than one percent) properties. (Source: “Corporate Profile: February 2023, “Getty Realty Corp., last accessed March 1, 2023.)
The company’s real estate portfolio has a 99.8% occupancy rate. Four of its tenants are Global Partners LP (NYSE:GLP), CrossAmerica Partners LP (NYSE:CAPL), BP plc (NYSE:BP), and Valvoline Inc (NYSE:VVV).
Getty Realty Corp.’s active acquisition strategy has helped diversify its tenant base, property type, and geographic reach. Since January 2016, the company has acquired 343 properties for $868.0 million. Over that period, it added 16 states to its national business footprint and entered 39 new tenant relationships.
In 2022 alone, Getty Realty Corp. invested $157.5 million in 52 properties. (Source: “Getty Realty Corp. Announces Fourth Quarter and Full Year 2022 Results,” Getty Realty Corp., February 22, 2023.)
This included $137.3 million to acquire 16 car washes, 14 auto service centers, nine convenience stores, and one drive-through restaurant. (Source: “Corporate Profile: February 2023, “Getty Realty Corp., last accessed March 1, 2023.)
The $157.5 million included development advances totaling $20.2 million for nine new-to-industry car washes and three new-to-industry convenience stores.
Getty Realty Corp. currently has more than $110.0 million of investments under contract for the acquisition and development of 29 convenience stores, auto service centers, and car washes.
Subsequent to the end of 2022, the REIT invested $5.6 million for the development and acquisition of six car wash properties in the Jacksonville, Florida; New Haven, Connecticut; Raleigh, North Carolina; Richmond, Virginia; and Washington, D.C. metropolitan areas.
Another Quarter of Financial Growth
For the fourth quarter of 2022, Getty Realty reported net earnings of $27.3 million, or $0.57 per share, up by 51.5% over the $18.0 million, or $0.38 per share, in the same prior-year period. (Source: Getty Realty Corp., February 22, 2023, op. cit.)
The company’s fourth-quarter 2022 funds from operations (FFO), which are a measure of cash flow, came in at $30.2 million, or $0.63 per share. That was a 37% increase over the fourth-quarter 2021 FFO of $22.0 million, or $0.47 per share. Getty Realty Corp.’s adjusted FFO were $26.4 million, or $0.55 per share, a 4.7% jump over the fourth-quarter 2021 AFFO of $25.2 million, or $0.54 per share.
During the fourth quarter of 2022, the REIT invested $83.3 million in 36 properties and completed one redevelopment project.
For full-year 2022, the company announced that its net earnings rallied by 43% to $90.0 million, or $1.88 per share. Its full-year FFO advanced 36% to $117.0 million, or $2.44 per share. Meanwhile, its 2022 AFFO climbed by approximately eight percent to $102.5 million, or $2.14 per share.
Commenting on the results, Christopher J. Constant, Getty Realty Corp.’s president and CEO, said, “2022 demonstrated the ongoing successful execution of our strategies to deliver reliable earnings growth, portfolio diversification, and platform expansion.” (Source: Ibid.)
For fiscal 2023, the company reaffirmed its full-year AFFO guidance of $2.19 to $2.21 per share.
Getty Realty Stock’s Quarterly Dividend Increased by 4.9%
GTY stock is great for investors who are looking for reliably growing high-yield dividends. By all accounts, Getty Realty Corp. is looking to build on its 10 consecutive years of dividend growth. In October 2022, the REIT declared a dividend increase of 4.9% to $0.43 per share.
While the company has announced eight consecutive years of “substantial” dividend increases, it has actually raised its dividends every year since 2012. Since that year, it has also announced three special dividends: in 2014, 2015, and 2016. (Source: “Dividends,” Getty Realty Corp., last accessed March 1, 2023.)
In February 2023, the company declared another regular dividend of $0.43 per share, for a current yield of about five percent. This dividend is payable on April 6 to shareholders of record as of March 23. (Source: “Getty Realty Corp. Announces Regular Quarterly Cash Dividend,” Getty Realty Corp., February 21, 2023.)
The Lowdown on Getty Realty Corp.
Getty Realty is an excellent REIT that operates in an industry that has proven to be both recession-resistant and pandemic-resistant. The company reported solid financial results in 2020 and 2021, as well as strong financial growth in 2022.
Also in 2022, despite the challenging economic environment, Getty Realty Corp. increased its AFFO by eight percent and its AFFO per share by 2.9%. In the fourth quarter of that year, the company increased its quarterly dividend by 4.9% and provided solid 2023 guidance. This helps explain why Getty Realty stock has been thumping the broader market.
Going forward, a resilient economy and Getty Realty Corp.’s active acquisition strategy should help the company continue reporting high cash flow generation, allowing it to keep providing GTY stockholders with safe, reliable, growing, high-yield dividends.
