While looking at the financials of a few companies today over on Yahoo Finance I stumbled upon the largest self storage landlord in America. Public Storage, which has a market capitalization rate of $23.19 Billion (wow), has proven to be a high performing investment with minimal dips throughout the recession.
After reading about the strategies of Warren Buffet with buying companies with a durable competitive advantage, that aren’t glamorous, and don’t need much research and development, self storage may fit that bill, slightly… I’m not sure if there’s a durable competitive advantage, but there are consistent returns without much need for R&D.
I’ve heard that self storage has been an investment that’s known the be recession proof, but I was surprised to see just how well the stock of Public Storage has performed over the last 20 plus years. Especially considering real estate has an incredibly negative connotation in most people’s minds at the moment. At least that seems to be the trend here in the Green Bay commercial real estate market.
If you would’ve invested in Public Storage in Feb of 1990 your shares would have cost you approximately $4.15. As I’m reading the chart today (1-18-12) shares are selling for $135.55. As you can see from the investment tracking graph below growth has been steady with a dip during the great recession (like pretty much every business you look at a stock chart for).
When calculating an annualized rate of return by using a simple time value of money calculator we can see that Public Storage has an annual rate of return of 17.17%!
I’m not sure about you, but a 17.17% annualized rate of return over the course of 22 years seems pretty darn good to me.
Icing on the Cake
Not only does the rate of return for the value of the stock have an amazing return, Public Storage is also currently offering a 2.8% dividend on top! How’s that for icing on the cake.
Apparently the industry of storing other people’s stuff has some decent margins and is a consistent performer. Maybe building your own garage and renting it out could be just as lucrative?
I’m in no way trying to push this stock on you and make no affiliate sales by sharing this information, but just thought it was an interesting factoid.
Do you think returns like this into the future are possible?
Have you ever or do you currently have a self storage unit?
Image from flickr