Profitable storage

If you’re looking for solid stocks with dividend yields over 3 percent, real estate investment trusts, or REITs, are an excellent option. They’re required to pay out 90 percent of their taxable income to shareholders, and many pay 100 percent. One REIT for investors to consider is Public Storage (NYSE: PSA), which has a dividend yield recently over 4 percent.

Public Storage primarily acquires, develops and operates self-storage facilities, and it boasts more than 2,400 facilities in 38 states and 228 facilities in Western Europe. It generates revenue through rental income from tenants, and it can boost that by raising prices in supply-constrained markets or via higher occupancy rates. On the downside, tenant leases tend to be short-term in nature, which can lead to a more cyclical business.

Public Storage offers a lot of stability. Over the past few quarters, its occupancy rate has easily topped 90 percent — and it’s even stronger in the supply-constrained West Coast regions. It also has more market share than the next three largest publicly traded self-storage companies combined. Investors can enjoy its dominant market-share position, thanks to its early acquisition strategy that gobbled up facilities in a highly fragmented industry.

People will always need a place to store extra stuff; that demand isn’t going away anytime soon. That makes Public Storage well worth considering for long-term investors seeking income.