Warren Buffett's nearly 10% stake in Store Capital, his only real-estate stock, has turned out to be a multi-bagger, as the firm continues to grow at a robust pace. We take a closer look.
Warren Buffett’s nearly 10% stake in Store Capital, his only real-estate stock, has turned out to be a multi-bagger, as the firm continues to grow at a robust pace. Notably, the legendary billionaire investor had picked up a 10% stake in the firm in June 2017. According to the firm’s website, Warren Buffett’s company, Berkshire Hathaway invested $377 million in STORE Capital, representing 9.8% of total shares outstanding. Berkshire Hathaway’s total investment has grown to a whopping $605 million in the firm as on December 31,2018. The investment has grown by a whopping $228 million in less than 2 years.
While, Buffett’s penchant for dividend paying stocks is well-known, its intriguing to note than Store Capital Corp pays a dividend of 4.1% —more than double the S&P 500 average, according to a Forbes report. The firm has also raised its dividend 32% in the past five years.
In the latest quarter, Store has reported record earnings of $137 million, implying a 69% jump from a year earlier. The scrip also has a stellar return on investment, as today, for every Store share you own, you’ll get a $1.32 cash payment each year, notes Forbes. Store shares closed at $32.49 on the NYSE on Thursday.
Notably, Store Capital, a real estate investment trust (REIT) focused on stand-alone, service-oriented, retail businesses. The company focuses on real estate properties where tenants are under leases that require them to cover property taxes, building insurance, and maintenance. Further, as a REIT, Store Capital is mandated distribute at least 90% of its taxable income to shareholders in the form of dividends. This explains the firm’s high dividend payout. Many of the heavyweights in Buffett’s portfolio such as Kraft Heinz, Wells Fargo, The Coca-Cola Company, International Business Machine Corporation (IBM), Phillips 66, American Express are known to pay heavy dividends.