Self storage: One of the best FTSE 250 stocks for continued growth & returns
The FTSE 250 plays host to some incredibly promising stocks. Many long-terms investors have been buying and holding great-performing shares here for years to even decades.
Finding companies from the FTSE 250 to invest in can often be a tall order – the easy option is certainly to do what everyone else is doing, that is, keep investing in the most widely-followed FTSEs, although these rarely deliver market-shaking returns. This is why self-storage should be practically at the top of your ‘buy list’, and here’s why:
Self-storage: A cash cow that keeps giving
If we take a quick look at a self-storage site’s business model, it is incredibly basic. They buy optimally-located real estate and convert it into an entire collection of secure storage where businesses or families can keep their excess belongings safe. A small portion of their revenues arrive in the form of contents insurance sales, while the bulk comes from rent income on a square foot basis.
On the one hand, leasing storage space hardly sounds like a thrilling business. In fact, it can feel downright dull and drab compared to, say, a research firm finding ways to make spinal surgery less expensive and less complicated.
On the other, we have seen time and time again throughout history how ‘dull, drab, and boring’ companies often turn out to be very lucrative investment opportunities – in fact, their lack of popularity and trendiness usually make them underpriced compared to others.
Since 2013, self-storage stock has continued to increase its dividend - the steady expansion of sites across both the UK and EU bolstered impressive cash flows and operating profits for those sites.
So, if we look at the last decade alone, investors have gained a total return averaging 780%. On a yearly basis, that’s a 24.3% gain, which is pretty much twice that of the FTSE 250’s 10.6% historical average!
While the self storage sector has performed brilliantly in the UK, it remains quite fragmented in places like Germany, Belgium, and the Netherlands. But if it can replicate the same performance as the UK, the self storage sector in these regions and beyond could be a very lucrative one to invest into in the next 10 years.
Are FTSE 250 stocks risk-free?
No, and we’d recommend exercising caution.
The FTSE 250, even though happens to be among the UK’s leading indices, is full of volatility. Stocks rise and plummet in a short time and any investments must be treated with the same skepticism.
We do not see the demand for self storage fade away anytime soon, especially in a ripe market like the UK. It’s a relative safe investment, and sites like Woodpecker Self-Storage are proving that investing in this market, either by stocks or setting up your own site can prove to be a worthwhile investment.