National Storage Affiliates Trust Has Great Business Model Regardless of Economy
Americans love to shop. If you don’t believe this, take a look at the U.S. economy, which is largely driven by consumers.
When times are good, consumers will spend money. Even in the current high-interest-rate environment, American consumers continue to spend. If the economy falters, however, we could see a recession, which could result in homeowners losing their homes. This could help the self-storage industry.
That’s where industrial real estate investment trusts (REITs) like National Storage Affiliates Trust (NYSE:NSA) come in.
With a market valuation of close to $5.0 billion, National Storage Affiliates had ownership interests in 1,050 self-storage facilities (comprising 68.6 million rentable square feet) at the end of 2023. (Source: “2023 Annual Report,” National Storage Affiliates Trust, last accessed May 15, 2024.)
Those properties are situated across 42 states and Puerto Rico, with a focus on the top 100 metropolitan statistical areas in the U.S.
The below price chart shows NSA stock down by 10.0% in 2024 (as of this writing) but within 12.2% from its 52-week high of $42.54. In December 2021, the stock was trading 89% higher, at $70.04 per share.
I like the risk/reward opportunity with National Storage Affiliates stock, especially since it’s currently trading above its 50-day and 200-day moving averages (MAs) and in a bullish golden cross pattern on the chart.
Chart courtesy of StockCharts.com
Management Reports Profits & Free Cash Flow
National Storage Affiliates Trust grew its revenues for four consecutive years to a record high of $858.1 million in 2023. This included double-digit revenue growth from 2020 through 2022.
Analysts estimate that National Storage Affiliates will report a 10.1% drop in revenues to $771.7 million for 2024 and follow that with a small rebound of 4.3% to $805.1 million in 2025. (Source: “National Storage Affiliates Trust (NSA),” Yahoo! Finance, last accessed May 15, 2024.)
| Fiscal Year | Revenues (Millions) | Growth |
| 2019 | $387.9 | N/A |
| 2020 | $432.2 | 11.4% |
| 2021 | $585.7 | 35.5% |
| 2022 | $801.6 | 36.9% |
| 2023 | $858.1 | 7.1% |
(Source: “National Storage Affiliates Trust,” MarketWatch, last accessed May 15, 2024.)
The company’s gross margins have held steady above the 70% level for the last five years.
| Fiscal Year | Gross Margin |
| 2019 | 72.2% |
| 2020 | 72.2% |
| 2021 | 74.5% |
| 2022 | 74.8% |
| 2023 | 75.1% |
National Storage Affiliates Trust has been profitable based on generally accepted accounting principles (GAAP) earnings per share (EPS) over the last four years, with a record high of $1.48 in 2023.
Analysts expect National Storage Affiliates Trust to report a drop in profits to $0.88 per diluted share in 2024 and $0.83 per diluted share in 2025. There are high estimates of $1.10 and $1.68 per diluted share for 2024 and 2025, respectively. (Source: Yahoo! Finance, op. cit.)
| Fiscal Year | GAAP-Diluted EPS | Growth |
| 2019 | -0.15 | N/A |
| 2020 | 0.53 | 467.2% |
| 2021 | 0.98 | 84.7% |
| 2022 | 0.99 | 0.6% |
| 2023 | 1.48 | 49.4% |
(Source: MarketWatch, op. cit.)
National Storage Affiliates Trust’s funds statement shows consistent positive free cash flow (FCF) for five consecutive years, including a record best in 2023. In 2023, National Storage Affiliates used its FCF to buy back its own shares.
| Fiscal Year | FCF (Millions) | Growth |
| 2019 | $186.7 | N/A |
| 2020 | $205.4 | 10.0% |
| 2021 | $303.4 | 47.7% |
| 2022 | $400.1 | 31.9% |
| 2023 | $406.0 | 1.5% |
(Source: MarketWatch, op. cit.)
National Storage Affiliates Trust’s balance sheet carried $3.7 billion in total debt and $87.7 million in cash at the end of 2023. (Source: Yahoo! Finance, op. cit.)
The debt may appear high, but the company has had no problem covering its financial obligations and paying NSA stock’s dividends. National Storage Affiliates has easily covered its annual interest expenses with higher earnings before interest and taxes (EBIT).
The REIT’s interest coverage ratio of 2.4 times in 2023 was fine, but it could improve, given that the ratio averaged at 2.5 times from 2019 to 2023.
| Fiscal Year | EBIT (Millions) | Interest Expense (Millions) |
| 2020 | $143.7 | $62.6 |
| 2021 | $220.7 | $72.1 |
| 2022 | $299.1 | $110.6 |
| 2023 | $404.7 | $166.1 |
(Source: Yahoo! Finance, op. cit.)
National Storage Affiliates Trust’s Piotroski score—an indicator of a company’s balance sheet, profitability, and operational efficiency—was a healthy 7.0 in 2023. That’s two notches below the top of the Piotroski score’s range of 1.0 to 9.0.
National Storage Affiliates Stock’s Dividends Look Safe
National Storage Affiliates Trust has paid dividends for 10 consecutive years and increased its dividends for nine straight years.
NSA stock’s forward dividend yield of 6.02% (as of this writing) is well above bond yields and above the stock’s five-year average dividend yield of 4.31%. (Source: Yahoo! Finance, op. cit.)
My view is that National Storage Affiliates stock’s dividend is safe and should continue to grow, considering the company’s profits and positive FCF.
| Metric | Value |
| Dividend Growth Streak | 9 Years |
| Dividend Streak | 10 Years |
| 7-Year Dividend Compound Annual Growth Rate | 12.9% |
| 10-Year Average Dividend Yield | 4.9% |
| Dividend Coverage Ratio | 2.1 |
The Lowdown on National Storage Affiliates Trust
NSA stock is worth a look for income investors who seek high-yield dividends and the potential for above-average share-price appreciation.
National Storage Affiliates Trust has extremely strong institutional ownership, with 449 institutions holding 95.3% of the REIT’s outstanding shares. The top two institutional investors are The Vanguard Group, Inc., with a 14.5% stake, and BlackRock Inc (NYSE: BLK), with an 11.9% stake. (Source: Yahoo! Finance, op. cit.)