Stock Pick #4 – Education Realty Trust
Recommended by: Nancy Zambell, editor of Buried Treasures Under $10
Education Realty Trust Inc. (NYSE: EDR), created as a REIT in 2004, is one of the largest owners and operators of collegiate student housing in the United States. This makes it a stable but potentially lucrative investment, with 65 properties in 21 states. First, due to SEC regulations for real estate investment trusts, EDR returns a hefty portion of its profits via dividends — a 2.9% yield as of this writing. Secondly, the numbers show a big upside for shares.
According to the U.S. Labor Department, college enrollment hit an all-time high last year, with more than 70% of high school graduates opting for college rather than trying their luck in a recession-heavy economy. But the big upside of Education Realty Trust is that the profits don’t rely on student loans like shady for-profit education stocks that have been in the news in recent months. The majority of the company’s revenues (86.9%) are derived from its student housing leasing. EDR’s preleasing is 3.1% ahead of last year at this time, and net rental rates are 1.9% ahead of last year. Those numbers point to future growth and make this stock a good buy for September as school starts.