Image Source: Pixabay
 Linked here is a detailed quantitative analysis of National Retail Properties, Inc. (NNN). Below are some highlights from the above linked analysis:Company Description: National Retail Properties, Inc. is an equity real estate investment trust that invests in high-quality, freestanding retail properties subject to long-term net leases with major retail tenants.Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham NumberNNN is trading at a discount to only 3.) above. When also considering the NPV MMA Differential, the stock is trading at a 16.0% discount to its calculated fair value of $48.08. NNN earned a Star in this section since it is trading at a fair value.Dividend Analytical Data: In this section, there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%NNN earned one Star in this section for 3.) above. NNN earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1985 and has increased its dividend payments for 33 consecutive years.Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:1. NPV MMA Diff.
2. Years to > MMANNN earned a Star in this section for its NPV MMA Diff. of $1,162 This amount is in excess of the $500 target I look for in a stock that has increased dividends as long as NNN has. The stock’s current yield of 5.63% exceeds the 3.75% estimated 20-year average MMA rate.Peers: The company’s peer group includes: The company’s peer group includes: Realty Income Corporation (O) with a 6.0% yield, Simon Property Group, Inc. (SPG) with a 4.8% yield, and Kimco Realty Corporation (KIM) with a 4.5% yield.Conclusion: NNN earned one Star in the Fair Value section, earned one Star in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of three Stars. This quantitatively ranks NNN as a 3-Star Hold stock.Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $52.76 before NNN’s NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 33 years of consecutive dividend increases. At that price the stock would yield 4.3%.Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is -0.4%. This dividend growth rate is lower than the 2.5% used in this analysis, thus providing a margin of safety. NNN has a risk rating of 1.75 which classifies it as a Medium risk stock.National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. The company’s Free Cash Flow Payout at 66% (down from 67%) is above my acceptable level of 60%, and its Debt to Total Capital at 50% (flat with the prior) is above the 45% maximum I look for. NNN is trading at a discount to my calculated fair value of $48.08. I would like to see some improvements to its dividend fundamentals before adding to my position.More By This Author:Chevron Corporation (CVX) Dividend Stock Analysis
Caterpillar, Inc. (CAT) Dividend Stock Analysis
Microsoft Corporation (MSFT) Dividend Stock Analysis