Should You Invest in Public Storage?

OVERVIEW

Public Storage is a real estate that is based in the United States. The company buys and develops land into self storage facilities under the Public Storage brand. The company owns over 2500 storage facilities in the United States and has interests in others in Europe as well. The company was founded in 1972.

Why You Should?

  1. Public Storage is a REIT (basically real estate) play in an investor’s portfolio. This stock is a great way to diversify your portfolio if you do not happen to own any real estate plays. This will benefit your portfolio as it will lower risk.
  2. Public Storage gives a dividend of about 8 dollars a stock. A dividend is an amount of money that a company gives back to its investors every quarter. This is an extremely good amount and makes Public Storage a “dividend aristocrat” in the stock market. This will benefit investors in the company.
  3. Public Storage is not the most risky real estate play in an investor’s portfolio. The company tends to rely on month-to-month leases on its property. During strong economic times, people who want to move will use these rental services for a temporary transition and during an economic downturn, people will use this service in order to downsize. This will benefit the company and its investors.
  4. The company has seen rising revenues over the past couple of financial years. This has helped the company grow and expand its presence across its markets. This has also benefited investors in the company. In the financial year of 2020, the company reported revenues of around 3 billion and profits of around 1.36 billion. In the financial year of 2019, the company reported revenues of around 2.92 billion but higher profits of around 1.52 billion.

Why You Should Not?

  1. Public Storage faces tough competition in the self storage industry. Some of these companies include Extra Space, U-Haul, and many others. Though these companies are not listed on the stock market, investors should still know about these other companies. These companies might hurt Public Storage and its investors in the future.
  2. Interest rates might be rising in the future in order to combat inflation in the United States economy. During times of rising interest rates, real estate stocks (like Public Storage) do not tend to do well. If the Federal Reserve needs to raise rates in the near-term, Public Storage will see its stock price fall in the future.
  3. Even though many people consider Public Storage to be a safer real estate play, the company still relies on month-to-month tenancy. However, during tough economic times, people can quickly leave their tenancy at Public Storage. This will cause a drop in the demand for self storage and will hurt the company and its investors.

MY OPINION

I think that Public Storage is a decent long-term investment due to its position as a good diversification play, a good dividend play, rising revenues, a well as its economic resiliency. However, tough competition, slight economic risks, and rising interest rates might hurt the company and its investors in the future.

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Aaditya Patel

Aaditya Patel

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.