Shares of retail real estate investment trust (REIT) Brixmor Property Group (NYSE:BRX) got a lift Thursday when it was reported that the company’s CEO, Mr. Michael A. Carroll, had just spent more than $218,000 of his own money to acquire 9,146 shares of the company at an average purchase price of $23.90 per share.
The purchase, which took place on July 15, was reported to the SEC via a Form 4 filing on July 16. Shares of Brixmor rose 1.2% in ordinary trading Thursday, outperforming the 0.4% rise seen elsewhere on the Dow.
Just because the CEO is buying Brixmor, however, doesn’t necessarily mean that you should follow suit.
What does it mean to you?
Priced at $24.10 per share today, Brixmor carries a $7.2 billion market capitalization — and a very expensive price-to-earnings ratio of 62.
Granted, the REIT pays a respectable 3.8% dividend yield. But a bigger, perhaps more stable REIT such as Kimco Realty (NYSE:KIM) can be had for as low as 17.2 times earnings, and Kimco pays its shareholders a superior dividend yield of 4.1% as well.
Why might investors want to buy Brixmor instead of the cheaper, more generous dividend-paying Kimco? Well, if you’re not as interested in the companies’ valuations today, as in how they might look in a few years, Brixmor does appear to have the better prospects. Analysts who follow Brixmor expect the REIT to deliver earnings growth in the neighborhood of 16% annualized over the next five years (according to Yahoo! Finance data). Kimco, in contrast, is pegged for a plodding growth rate of less than 5%.
Essentially, the choice between the two REITs boils down to this: Do you prefer a cheap price and more income today — or do you hope for more growth tomorrow?
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