The great thing about these businesses is that you can get exposure to a broad portfolio of properties, even if you only have a small sum to invest. What’s more, you can invest in sectors of the property industry that would usually be out-of-bounds to individual investors, such as self-storage business Lok’n Store (LSE: LOK). 

Self-storage

Lok provides self-storage facilities for clients. It is relatively small with a market capitalisation of just £155m at the time of writing, but it is expanding rapidly. Over the past six years, net profit has increased at a compound annual rate of 22% and earnings per share have grown at a rate of 14% per annum.

As the company has grown, shareholders have been well rewarded. Every £1,000 invested in the business back at the beginning of 2015 is worth nearly £2,500 today.

It doesn’t look like the company is going to slow down any time soon. Today the group reported an 8.7% increase in self-storage revenue for fiscal 2019. A mix of higher prices and more customers looking for storage solutions helped drive growth over the 12 months. Unit occupancy rose 6% year-on-year, and the price per square foot rose 0.6% year-on-year.

Lok opened four new landmark ‘stores’ in Dover, Cardiff, Exeter and Ipswich, as well as acquiring an existing store in Hedge End, Southampton, during the period. On top of this, the company has another eight new landmark sites in development, with the potential to boost its trading space by 27%.

If we assume that these facilities will attract the same level of business as the current portfolio, the new units could power earnings per share higher by around 27% over the next few years.

Considering this pipeline, it seems to me as if Lok’s growth is only just getting started. The shares currently support a dividend yield of 2.3%, and the distribution has doubled over the past five years. 

German business

Another property play with a fantastic record of generating value for shareholders is Sirius Real Estate (LSE: SRE).

Like Lok, Sirius is a relatively unique property business. It is engaged in the operation and development of commercial property in Germany. In total, the company owns 60 business parks across the country, directly and through joint ventures.

Over the past six years, its property portfolio more than doubled in size. Shareholder equity — the total value of assets in a company minus all liabilities — has increased 220% since 2014. Management has financed growth with retained capital and the issue of new shares, keeping borrowing low. Net-debt-to-assets was just 43% at the end of fiscal 2019, down from 93% at the end of 2014. 

And as the firm’s property portfolio has grown, so has the share price. Over the past five years, the stock has produced a total return for investors of nearly 20% per annum, compared to just 6.2% for the FTSE 100. 

I think it could be worthwhile buying into this growth story, and today the stock is on offer. It is trading just above book value per share and offers a dividend yield of 4.5%. 

The post £5k to invest? I think these 2 income stocks could be a safe place to invest appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Indeed, I believe one of the most attractive qualities about Lok is its dividend growth record. Over the past six years, the payout to investors has risen by 100% or around 15% per annum and City analysts have pencilled in annual double-digit growth for the next two years. 

This rate makes the company, in my opinion, a fantastic income play. And I believe dividend growth could surpass City forecasts in the years ahead as Lok ramps up its store expansion policy.

Investing in growth

Today it reported the acquisition of two further freehold sites to add to its development pipeline, one in Cardiff and one located in Cheshunt, Hertfordshire. Both of the sites are located in what the company describes as “busy” locations.

With the addition of these stores, Lok has a development pipeline of nine landmark stores. According to management, this “pipeline adds 39% to owned freehold trading space and 54% to the managed store portfolio, delivering a total of 32% increase to overall trading space.”

Looking at this pipeline for growth, it is no surprise that the analysts expect the company’s earnings per share to increase by around 30% over the next two years.

Another attractive quality of the business is the fact that its CEO, Andrew Jacobs owns almost 19% of the company. I am big fans of companies where management holds a significant stake because it means they are highly incentivised to produce the best returns for investors, and not put the enterprise in a position that may jeopardise their wealth and reputation.

In this case, it seems Jacobs is also as much of a fan of dividends as I am, which is great news for income investors. In the announcement revealing today’s deals, he declared “we are producing predictable growth in dividends for investors from…an increasing asset base and strong balance sheet.”

This commitment to dividends helps Lok stand out as one of the market’s top dividend stocks. I also believe it more than makes up for the below-average dividend yield of 2.6% offered by the shares. 

Secure income 

If Lok isn’t your cup of tea, then perhaps Secure Income REIT (LSE: SIR) might be a better buy.

Secure Income was founded by property entrepreneur Nick Leslau, who remains one of the company’s largest shareholders. In total, management owns 16.4% of the business, a stake worth £140m at the end of December 2017. 

The real estate investment trust was founded with the goal of providing a secure, steady income for investors backed by property. And looking at the company’s current property portfolio, there’s no reason to believe that it cannot accomplish this goal. The group has protected itself from the risk of vacancy by sticking only to long-term lets with strong covenants. The weighted average unexpired lease term is 22.2 years, and there are no break options, which should enable it to sail through any property market storms.

At the same time, 58% of the company’s contracts with lessees have fixed annual uplifts in rent of at least 2.8% per annum. The remainder of the portfolio is on RPI-linked agreements with annual and five-yearly rental revisions.

Put simply, Secure Income has constructed one of the most defensive property portfolios around, and you can take advantage of this today.

Living up to expectations 

Shares in Secure Income also look to be much more appropriately valued than those of Lok. The dividend yield is a respectable 4%, and management is always on the lookout for new assets to buy, which will increase the group’s net asset value. 

Last year it registered net asset value growth of 14.5% which, together with dividends paid, equated to a total shareholder return of 19%. Secure Income certainly looks to be living up to its name.

The post Dividend growth stocks: Are these the best picks around? appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Lok’n Store (LSE: LOK) is a great example. The company provides self-storage and managed storage services across the country, a service that has seen steady growth in demand over the past five years. Lok has met this need with extra capacity helping net profit to double since 2013. 

Profits boom 

According to a trading update issued by the firm this morning, it looks as if this growth is set to continue. The update notes that following a successful 2017 “trading in the first half of FY2018 continues to be strong with January 2018 delivering the highest ever level of new storage sales enquiries in a single month.” 

First-half like-for-like revenue was up 6.9% year-on-year and to help complement growth, the firm is currently developing six new “landmark stores” to build out its existing portfolio of landmark stores in Broadstairs, Bristol, Hemel Hempstead, and Gillingham.  All six new stores are “in prominent locations with large catchment areas that demonstrate the company’s ability to source high-quality sites adding to future sales and earnings growth.“

City analysts expect these new stores to help Lok grow its earnings per share by 13% for fiscal 2018 and 14% for fiscal 2019 to 13.8p. Based on these numbers, the shares are trading at a relatively demanding forward P/E of 31.2, a valuation that might put some investors off. However’ Lok’s most attractive quality is its dividend potential. Over the past five years, the per share payout has doubled, and analysts are expecting 10% per annum growth for the next few years. With £11.4m of cash on the balance sheet, it looks as if the firm has plenty of headroom to meet these projections. At the time of writing the shares support a dividend yield of 3.1%. 

Cheaper income

Another dividend stock I like the look of is Safestore Holdings (LSE: SAFE). 

Safestore uses the same business model as Lok, and its income stream looks just as secure, although the one advantage Safestore has over Lok is that the shares are cheaper. The stock currently trades at the forward P/E of just 18.4, so for value income hunters, this might be a better buy.

Over the past five years the group’s dividend payout to shareholders has risen by 100% and this year, City analysts are projecting a 60% jump in the payout to 16p per share, giving the stock dividend yield of 3.2%. Once again, this dividend yield is around the same as the broader market. However, Safestore’s record of growing the payout at a double-digit rate every year makes it more attractive for dividend growth investors. 

The company’s latest set of results, for the year ended 31 October 2017, showed revenue growth of 10% to £130m while underlying EBITDA grew 11% to £73m on a constant currency basis. Free cash flow for the year Jumped nearly 20% to £50m, easily enough to cover the total dividend outlay for the year of just under £26m and fund further expansion. 

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.