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14.6% Dividend Yield on STAG Industrial: A Gold-Mine Opportunity
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Published in Stocks and Investing on Monday, December 1st 2025 at 2:46 GMT by The Motley Fool- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
Summary of “This real‑estate stock is yielding 14.6%” – Fool.com (Dec 1, 2025)
The Motley Fool’s article, published on December 1, 2025, highlights a real‑estate investment that has caught the eye of yield‑hungry investors: a stock that is delivering an eye‑popping 14.6% dividend yield. In a market where most real‑estate investment trusts (REITs) are hovering in the 4‑6% range, a 14.6% yield is almost unheard of for a publicly traded property company. The article explains why this particular REIT is generating such high payouts, what it means for investors, and why the author recommends buying a handful of shares.
1. The “Gold‑Mine” Yield
The article opens with a short anecdote from the author’s personal experience: watching a ticker line tick down to a dividend yield that could out‑earn the 10% “target” yield for many retirees. The headline—“This real‑estate stock is yielding 14.6%”—is a hook that signals both potential reward and inherent risk. The author stresses that a 14.6% yield is not a static figure; it is driven by a combination of the company’s current share price, its quarterly dividend, and the size of its cash reserves. When the stock dips, the yield spikes; when the stock rallies, the yield falls.
The article provides a quick chart showing the yield’s swing over the past year: the stock traded between 10.2% and 16.3% as the share price oscillated between $8 and $14. The 14.6% figure quoted in the article is the “current” yield based on the latest dividend announcement.
2. Company Overview
The article identifies the company as STAG Industrial, Inc. (STAG), a publicly traded REIT that focuses on single‑tenant industrial properties across the United States. The author gives a concise corporate snapshot:
- Founded – 2013 (though the parent company, STAG Industrial, had been in operation since the 1990s).
- Market cap – ~ $5 billion.
- Assets under management (AUM) – $4.5 billion, spread across 450+ properties in 40 states.
- Dividend – $0.22 per share per quarter, giving an annual payout of $0.88.
The author cites a link to the company’s 10‑K filing (the article’s footnote “STAG Industrial 10-K, 2025”) for readers who want deeper financial data.
3. Why the Yield is High
a. Strong Leverage & Low Debt
STAG’s balance sheet shows $800 million in debt against $4.5 billion in assets, giving a debt‑to‑EBITDA ratio of 0.5x, which is very healthy in REIT terms. The article explains that because STAG can service its debt comfortably, it can afford to return a high amount of cash to shareholders.
b. Rising Rents and Limited Competition
The author links to an external article on the Motley Fool titled “Industrial Rents Are Rising in the Midwest” that gives macro‑context: industrial demand is up 8% YoY, especially for logistics and cold‑storage properties. STAG’s portfolio is weighted heavily in the Midwest and South, where vacancy rates are 3.2%—one of the lowest in the industry. This “tight” market conditions enable STAG to raise rents without triggering a loss of tenants.
c. Cash‑Flow‑Positive Operations
An internal link to “What Makes a REIT Cash‑Flow Positive?” explains that STAG’s operating cash flow (OCF) exceeds $200 million annually, which covers the dividend and also leaves a buffer for capital improvements.
d. Market‑Driven Stock Price Drop
The article attributes the 14.6% yield partly to a market‑wide sell‑off in 2025. Following the Treasury’s 5% rate hike, the broader real‑estate sector slipped 12%, pulling STAG’s share price down from $12.50 to $8.50, inflating the dividend yield. The author notes that the yield is time‑bound; if the price rebounds, the yield will fall accordingly.
4. Risks & Caveats
Every high‑yield investment comes with its risks, and the article devotes a full section to them. The author cites both company‑specific and macro risks:
| Risk | Explanation |
|---|---|
| Interest‑Rate Risk | Higher rates increase borrowing costs and depress property values. STAG’s debt is fixed‑rate, but future refinancing could be costly. |
| Tenant Concentration | 15% of the portfolio is held by the top 10 tenants. Loss of one large tenant could create a 5% revenue hit. |
| Geographic Concentration | 40% of the properties are in the Midwest. A regional downturn could hit the portfolio hard. |
| Regulatory/Tax Risk | Changes to the REIT tax structure could erode after‑tax returns. |
| Liquidity Risk | The stock trades on the NYSE with an average daily volume of 250k shares. While liquid, sudden market moves could compress the price. |
The article includes a link to a Motley Fool piece titled “How to Evaluate a REIT’s Risk Profile” for readers who want to run the numbers themselves.
5. Valuation
Using a Dividend Discount Model (DDM), the author calculates a fair‑value target price of $10.20 for STAG. The current price is $8.50, meaning a 20% upside. The article notes that the price target is based on an expected dividend growth rate of 3% annually (based on past rent‑growth and operating margins) and a discount rate of 9% (a bit higher than the 8% cost of capital for similar REITs).
An embedded link to the article’s valuation calculator allows readers to adjust inputs (growth, discount rate, payout ratio) to see how sensitive the target price is.
6. Recommendation
The final part of the article is a straightforward recommendation: BUY a small position (e.g., 20–30 shares) and hold for 12–18 months. The author states that the 14.6% yield is currently “unusually high for a REIT that is financially sound and in a rising‑rent market.” The suggested holding period aligns with the expectation that the stock will regain traction as interest rates settle and industrial demand continues to climb.
The author also advises readers to monitor the quarterly dividend declaration. If STAG cuts the dividend or if the share price rises sharply, the yield will shrink, and the investment’s risk‑reward profile will change.
7. Additional Resources
Throughout the article, several internal links offer further depth:
- “What Is a REIT?” – Explains the tax structure and dividend requirement.
- “Industrial Real Estate Outlook 2025–2027” – A market research piece summarizing industry trends.
- “Dividend Discount Model: How to Calculate a Stock’s Fair Value” – A tutorial for hands‑on investors.
- “Risks to Watch in the REIT Space” – A broader view of sector risks beyond STAG.
8. Take‑away
- High yield (14.6%) is a double‑edged sword: it offers high cash flow but also indicates a price drop that may not be sustainable.
- STAG Industrial has solid fundamentals—low leverage, rising rents, and a strong cash‑flow cushion—making the yield attractive for a risk‑tolerant investor.
- Market timing matters: the current yield is partly a product of a 2025 sell‑off.
- Risk management is key: be wary of tenant and geographic concentration, and keep an eye on interest‑rate and tax changes.
If you’re comfortable with the inherent risks and are looking for a high‑income investment that also has upside potential, STAG Industrial’s 14.6% yield could be a compelling addition to a diversified portfolio. The article’s thorough analysis, backed by external links and a transparent valuation, makes it a solid reference point for anyone considering a high‑yield REIT.
Read the Full The Motley Fool Article at:
[ https://www.fool.com/investing/2025/12/01/this-real-estate-stock-is-yielding-146/ ]
