Franklin Street Properties
Market Cap: $860 million
YTD Performance: +4%
OK, Franklin Street Properties Corp. (AMEX:FSP) squeaked over the $10 hurdle recently after a decline at the beginning of August. But even though it’s barely in double digits, it’s still worth calling out for this feature.
FSP is a real estate investment trust, or REIT, like others on this list. As such, it must deliver 90% of its taxable income back to shareholders — to you and me, that means big dividends. Franklin Street owns and leases office properties mostly in the metropolitan D.C. area. And anyone familiar with Uncle Sam’s free-spending ways knows that commercial real estate in and around the nation’s capital is always in high demand among consultants, contractors, lobbyists and other businesses.
The company has seen year-over-year revenue increases in five of the past six quarters despite ending an investment banking arm in 2011, though profits admittedly have been thinner. Still, the 19-cent quarterly dividend is reliable, having been paid every quarter dating back to a dividend cut during the worst of the downturn in 2008.
Volume is pretty low, around 225,000 shares daily, so use a limit order if you trade. Also note that FSP is clearly a recovery play, considering its flop of about 50% from pre-crisis levels and more than 30% in the past 18 months. If commercial real estate doesn’t firm up, neither will Franklin Street shares. However, I remain convinced that encouraging (but admittedly mixed) economic news will provide a floor in this sector and ensure that at worst FSP moves sideways — delivering a dividend of over 7% while you wait.