The times, they are a-changing. But at least now it may indeed be for the better. In fact, analysts have started to believe that real estate stocks may finally make a comeback in 2024 … but only certain ones.
One of those is dividend stock Automotive Properties REIT (TSX: APR.UN), which has been tapped as a possible outperformer. So, let’s look at what’s been going on and why this dividend stock could take over in 2024.
Funds rise
In a report by analysts, funds from operations in 2024 per unit growth should average 3%. This should be led by many real estate stocks in the industrial sector, which includes Automotive Properties. These companies have seen above-average year-over-year rent growth, with sector-leading single property growth in 2023.
In 2024, these companies should continue to perform strongly, especially as renewals continue to climb. However, many industrial real estate investment trusts (REITs) are trading well below fair value. That’s why this dividend stock may be the one to buy, as it remains under the radar.
Today, let’s look at why APR stock could be an excellent stock to buy and why analysts continue to be behind its growth.
Earnings come in strong
During the third quarter, the dividend stock continued to see its fundamentals grow across the board. The REIT brought in adjusted funds from operations (AFFO) of $0.23. While this was lower than the year before, it managed to continue paying out cash distributions at the same level as 2022.
The dividend stock stated it had a debt-to-gross book value ratio of just 44.5%, putting it in a financially strong position. It held a $60.8 million undrawn capacity through its revolving credit facilities as well, with $300,000 in cash on hand. It also held five unencumbered properties valued at about $70.6 million.
Finally, the company’s valuation of its properties did go down compared to the year before, which is why it remains so valuable now to pick up. Market conditions saw a fair value loss of $800,000. Now, its capitalization rate increased to 6.56% compared to 6.37% the year before.
Why the future is rising
While there were some losses, they were not huge losses. The company continues to generate growth in key metrics, which include acquisitions and its lease structure. Furthermore, there is certainly going to be major growth in one area of this market that other REITs cannot claim. That’s automobiles.
APR stock focuses on creating car dealerships across the country. This has been quite difficult over the last few years, with the pandemic restrictions leading to supply-chain issues. Therefore, even used cars were hard to find. Now, the times are changing and we’re seeing more cars on the market.
Therefore, if you’re looking for growth, APR stock could certainly give this to you in the next year. And it remains a strong stock considering that it’s been through all this volatility and remained fairly strong. Even with high interest rates and inflation, the company is still strong. The REIT remains well positioned to continue great same-property net operating income growth for 2024.
So, with a dividend yield of 7.94% as of writing, trading at 5.02 times earnings, and down 15% in the last year, APR stock could be the dividend stock that soars in 2024.
