If You Invested $10K In Terreno Realty Five Years Ago, Here's How Much Your Shares Would Be Worth Today

One of the best things about buying real estate investment trusts (REITs) is that with the right stock, an investor can not only gain some appreciation but also procure a solid monthly or quarterly dividend for additional income.

But because not all REITs will deliver solid appreciation and dividend growth, it's important to look at a REIT's five-year history to help assess possible future returns. Take a look at one well-known REIT over the past five years, how much it's appreciated over that time and what it's generating in dividends today compared with March 2019.

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Terreno Realty Corp. TRNO is an industrial REIT that owns and operates 259 properties with 16 million square feet in six major U.S. coastal markets: Miami, Northern New Jersey/New York City, Washington D.C., Seattle, Los Angeles and San Francisco. Terreno has 580 customers as of Dec. 31. Its market cap is $5.63 billion and the 52-week range is $50.42-$65.64. 

Terreno Realty's investment philosophy is that these markets all have large and growing populations, developed infrastructure for the rapid distribution of goods and significant physical and regulatory barriers to the development of competing properties. 

If you had invested $10,000 in Terreno Realty five years ago in March 2019, you would have received 241.84 shares at $41.35 per share. Over the past five years, you would have collected $6.58 in dividends and the price per share would have grown to a recent closing price of $64.35.

The total return for those five years would be 71.54% or an average annual total return of 11.39%. Your starting investment of $10,000 would now be worth $17,153.76.

If, like many investors, you chose to reinvest the dividends rather than collect them, your original 241.84 shares would have grown to 271.15 shares and would now be worth $17,448.52.

Over the past five years, Terreno Realty has had no dividend cuts and has increased the quarterly dividend five times — from $0.24 per share to $0.27, $0.29, $0.34, $0.40, and in September 2023 to $0.45 per share. The annualized dividend of $1.80 presently yields 2.8%. The next dividend payment will be on April 5 to common stockholders at the close of business on March 28 and the ex-dividend date is March 27.

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When compared to other industrial REITs, Terreno Realty's yield runs behind the norm. Out of 12 industrial REITs, and despite the frequent dividend increases, its dividend yield is still the third lowest. However, its annualized five-year return is the fourth highest among the 12. What it lacks in dividend yield, it makes up in appreciation. It should also be noted that its five-year average dividend growth rate of 13.4% is also the fourth best among all 12 industrial REITs.

Terreno Realty's payout ratio on its forward funds from operations (FFO) of $2.40 is still a comfortable 75%, so the dividend seems fairly stable and safe. On Feb. 7, Terreno released its fourth-quarter operating results. Funds from operations (FFO) of $0.58 beat the estimates of $0.57 and topped the fourth-quarter 2022 FFO of $0.54. Revenue of $86.48 million beat the estimates of $84.38 million and was 13.8% higher than fourth-quarter 2022 revenue of $76.01 million. 

In recent news, on Feb. 26, Terreno announced that it has commenced construction of Countyline Corporate Park Phase IV, Buildings 32 and 33 in Hialeah, Florida. Phase IV will have a combined total of 17 industrial distribution buildings and 3.5 million square feet on 17.3 acres. The buildings are expected to be completed in 2025. The total expected investment is $79.1 million, with a stabilized cap rate of 6%.

As for analyst views, on Feb. 12, Scotiabank analyst Greg McGinniss maintained a Sector Perform on Terreno Realty and raised the price target from $64 to $66.

In summary, Terreno Realty is an industrial REIT with a strong five-year track record of appreciation and dividend growth, yet still a modest dividend yield.

Weekly REIT Report: REITs are one of the most misunderstood investment options, making it difficult for investors to spot incredible opportunities until it's too late. Benzinga's in-house real estate research team has been working hard to identify the greatest opportunities in today's market, which you can gain access to for free by signing up for the Weekly REIT Report.

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