Alright, so let’s dive into this madness that is the world of dividend safety. You know, like dealing with an ex who somehow still has some sort of hold on you, the Safety Net model is all about keeping you on your toes. One wrong move, negative cash flow or just a hint of it, and boom! Your dividend safety rating gets a brutal smackdown.
But sometimes, just sometimes, you stumble upon a stock with a dividend safety rating so clean, it feels like finding a unicorn in your backyard. Our stock for today? Stag Industrial (NYSE: STAG). Yeah, I know, doesn’t exactly roll off the tongue, but hear me out.
First off, what even is Stag? It’s a REIT, which in English means Real Estate Investment Trust. Basically, they own a lot of industrial joints like warehouses and manufacturing sites. They cough up a monthly dividend of $0.1242 a share, which translates into an annual charmer of $1.49 or a 4.7% yield. Not too shabby, right?
Stag’s been doing this dance of increasing its funds from operations, or FFO if you’re into acronyms. FFO is how we geek out on cash flow in the REIT world. Rising FFO? Yes, please! More cash flow equals more dough for dividends, simple math.
Last year was a kicker: Stag tossed $370 million out in dividends but had $447 million in cash flow. That’s an 83% payout ratio. This year, they’re all about that growth life with projected cash flow hitting $487 million while dividends sneak up to $385 million. So, the payout ratio dips to a cool 79%. Not too bad in my book, and apparently in Safety Net’s grumpy old manual too.
Now, REITs are these nifty entities that by law have to hand over 90% of their profits to shareholders to keep Uncle Sam smiling. Profits and cash flow aren’t twins, maybe cousins though. But you see where the high payout comes into play, right? Anyway, as long as they ain’t paying more dividends than they’re raking in cash flow, I’m good. The Safety Net is alright with it too, surprisingly.
Stag’s been a champion, upping their payouts each year since they’ve had skin in the dividend game back in 2011. Okay, the raises lately aren’t exactly blowing socks off, but a “raise is a raise”, as they say. In 2025, they hiked it by a ridiculously minuscule $0.0009 per share monthly – a penny a year. I know, but hey, small wins?
From 2019 to now, we’re talking a half-cent bump monthly, $0.06 a year. Once again, slow and steady, but it shows they’re not joking around about dividends. Stag’s growing cash flow, has a decade-plus track record of amping up dividends, and isn’t overextending itself. If dividend safety had a picture in the dictionary, this might be it.
Got any stock whose dividend you want me to size up next? Holler at me. Seriously, I’m all ears.
Oh, and you’re curious about other stocks? Hit that “Search” deal up there on our Wealthy Retirement page, type in a name, and smash “Enter.”
One little note to end: Safety Net’s got a focus. It’s all about individual stocks. No messing with ETFs, mutual funds, or closed-end funds over here. Just keeping it real.
