Up Over 40%, Is this Ultra-High-Yield Dividend Stock Still Worth Buying for Passive Income?

Core Viewpoint - EPR Properties has experienced a significant stock rally of over 40% in the past year, leading to a dividend yield of 5.8%, raising questions about its attractiveness for passive income seekers [1] Group 1: Performance and Growth Drivers - EPR Properties reported a 5.3% growth in funds from operations (FFO) in the first quarter, driven by contractual rental increases and portfolio expansion investments [2] - The company invested $263 million last year in acquisitions and development projects, including attractions and fitness venues, contributing to rising earnings and share price [3] - Declining interest rates, with the Federal Reserve cutting rates by one percentage point last year, have made borrowing cheaper for REITs, positively impacting EPR Properties [5] Group 2: Financial Health and Valuation - EPR Properties expects to generate between $5.00 and $5.16 per share of FFO this year, indicating a 4.3% growth from the previous year [8] - The REIT trades at about 12 times its FFO, which is lower than many peers that trade in the 15-to-20 times range, contributing to its high dividend yield [8] - The company maintains a conservative dividend payout ratio of around 70%, with a monthly dividend of $0.295 per share, reflecting a sustainable financial foundation [9] Group 3: Investment Strategy and Future Outlook - EPR Properties has an investment-grade balance sheet and plans to sell $80 million to $120 million in noncore assets this year to enhance financial flexibility [10] - The company can invest $200 million to $300 million annually into new property investments without external funding, aiming for a 3% to 4% annual growth in FFO [11] - With improved cost of capital, EPR Properties is positioned to increase its investment pace and has lined up $148 million in development projects for the next two years [11] Group 4: Passive Income Potential - The combination of falling interest rates and improved growth prospects makes EPR Properties an attractive option for passive income, despite its recent price increase [12]