With an average yield of 3 percent, REITs are one of the top investments available. These income investments present a valuable opportunity due to the current demographics in the United States. Only 26 percent of millennials are married, and their exceptional level of student loan debt prevents them from getting a mortgage. Due to this, millennials are increasingly turning to self-storage options for their extra items.
The rise in Amazon, eBay and online companies has also increased the demand for inventory space. Meanwhile, local businesses are downsizing to smaller offices, which creates another demand for storage. All of these factors combined mean that self-storage companies will only increase in value over the coming years. At US Self Storage the company and similar businesses, this demand is being met and causing increased profits for investors.
Public Storage offers dividends and yields of 2.85 percent. In the first quarter of 2016, it posted $611,786 in revenue with revenue costs totaling $173,286. Due to this, the gross profit for the company encompasses $438,500. It is 30 percent ahead of its annual range. The company has enjoyed a solid stock performance, a boost in net income, higher profit margins and an increase in net income. The main negative associated with Public Storage is the fact that it has weak operating cash flow.
Extra Space Storage
Extra Space Storage enjoyed total revenue of $229,403 in the first quarter, and gross profits of $168,291. It has a share in more than 550 properties and 32 different states. Strengths for the company include a strong distribution and sales network. Extra Space Storage is experienced and exists in an industry with high barriers for market entry. The main threats to the company include access to cash flow, financial capacity and growing competition in the field.
Cube Smart Storage
Cube Smart Storage had a total revenue of just $118,871 in the first quarter, and a gross profit of $78,652. Unlike other companies on this list, Cube Smart Storage uses exceptional data analytics to boost their profits. The business is exceptional at boosting operational cash flow, increasing revenue and enhancing net income. At the same time, Cube Smart Storage has lower profit margins than other storage companies on the list.
Uncle Bob's Storage
Uncle Bob's Storage is the fifth-largest self-storage company in the United States. Run and owned by Sovran Self Storage, this company manages more than 500 storage facilities in the United States. Through its parent company, Uncle Bob's Storage has enjoyed benefits like reduced labor costs, a high growth rate, experienced staff members and high profitability. Unfortunately, it exists within a competitive market where future profitability is uncertain. High loan rates and the company's tax structure are areas where Uncle Bob's Storage could improve.
Operating under the parent company of Amerco, U-Haul is a network of 18,200 independent dealers and 1,600 companies. In total, U-Haul possesses a rental fleet of 135,000 trucks and 1,280 self-storage locations. Altogether, it has 491,000 rentable rooms. In terms of strength, Amerco possesses a diversified portfolio and consistent history of profits. At the same time, it is overly dependent on the United States market and needs to focus on expanding its influence. High competition is also a threat to U-Haul and Amerco.
Businesses like USSelfStorage.com offer extremely lucrative ways for investors to break into REITs. With a growing population of millennials to serve and a heightened demand for inventory storage, these companies are expected to enjoy strong revenue over the upcoming years. While each financial investment carries risks, the weaknesses for all of these stocks are fairly minimal for risk-averse investors.