The Retail REIT to Wait on: Saul Centers Inc (BFS)
Dividend Yield: 3.1%
I don’t have anything particularly negative to say about Saul Centers Inc (NYSE:BFS) except that its stock is up 30% over the past year, almost double the S&P 500 and six times its peers.
In fact, between 2012 and 2016, the owner of primarily Washington D.C.-area real estate, generated total annual returns for shareholders of 24.9%, 14.9%, 23.1%, -7.4% and 33.5%.
Its Q3 2016 earnings report showed a healthy $2.30 in funds from operations through the nine months ended Sept. 30. Relying on grocery anchors to bring in other tenants, 94.7% of its commercial portfolio is leased.
That said, given the uncertainty facing brick-and-mortar retail and a stock price that has clearly been on a good run since 2012, regressing to the mean is a real possibility.
More than anything, this is a valuation call. Fundamentally, Saul Centers is a sound retail REIT.