National Storage REIT (ASX: NSR) shares have proved surprisingly resilient throughout the COVID-19 pandemic. Despite plummeting 50% from the pre-coronavirus high of $2.43 to $1.20 by 19 March, National Storage has recovered much of that ground. The company had crept back to $1.87 as at the time of writing. Despite all the volatility, National Storage shares have still gained a little over 2% so far this year.
National Storage owns and operates more than 170 self-storage facilities across Australia and New Zealand. The company services a broad range of customer segments. It offers business and personal storage as well as insurance, packaging and vehicle and trailer hire services.
The impact of COVID-19
Back in April, the company was forced to downgrade its FY20 earnings guidance due to the coronavirus’ negative economic impacts. The previous earnings target was 10 cents per share, but the company reduced this to between 8.5 cents and 9.5 cents.
While this is disappointing, it still compares favourably against many other blue chip companies. This includes healthcare giant Cochlear Limited (ASX: COH) which withdraw its FY20 guidance completely due to COVID-19.
What it proves is that the company can remain profitable even in challenging conditions. The company’s Managing Director, Andrew Catsoulis said as much in the press release for the earnings downgrade. Catsoulis noted how the business’ “resilient nature” was “exemplified through this result in such a challenging and volatile environment.”
This could make National Storage shares a great defensive option for your portfolio to reduce volatility. While self-storage doesn’t look to have the explosive growth potential like tech darlings Appen Ltd (ASX: APX) or Afterpay Ltd (ASX: APT), demand for these services is pretty sticky. Just because the country is going through an economic downturn doesn’t mean people will magically find extra storage space in their homes. So National Storage should be able to generate reasonably dependable income streams regardless of the economic environment.
Should you invest in National Storage shares?
At their $1.87 price, National Storage shares are trading well below the February 52-week high of $2.43. This means they could offer good value to new investors. The company has a resilient income stream and has proved it can still remain profitable even in an economic downturn.
Plus, despite announcing their lowest dividend in years of just $0.034 a share, the company’s annual dividend yield is still over 4%. So, while it may not excite all investors, National Storage does make for a great “set and forget” income earner to add to your portfolio.
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Rhys Brock owns shares of AFTERPAY T FPO and Cochlear Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended Cochlear Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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