FTSE 250 incumbent Tritax Big Box (LSE:BBOX) is firmly on my best stocks to buy now list. It is in the logistics industry, which is a high growth industry. If I had to choose a stock to buy right now with £1,000 this would be high on my list.
High-growth industry
Tritax Big Box is a real estate investment trust (REIT). It invests in and funds pre-let development logistics facilities and real estate. Logistics has thrived over the pandemic period as restrictions meant high street stores were closed. In turn, consumers turned to online ordering. This boom meant many firms (who didn’t already have it set up) needed to facilitate online platforms for orders, e-commerce, and fulfilment. This is where Tritax comes in. It is firmly on my best stocks to buy now list and has been for some time.
Tritax was established and profit-making prior to the pandemic and it is not a flash in the pan. Nor has it emerged as one of my top FTSE stocks solely based on pandemic related results and demand.
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Performance and share price
Tritax announced full-year results for the year ending 31 December 2020 back in March. These made for excellent reading. My key takeaways were a 20% increase in profit and the fact that the value of its portfolio increased by nearly 12% to over £4bn. In addition, earnings per share increased by over 8% and a dividend of 6.4p per share was declared. Many of the incumbents on my best stocks to buy now list are good dividend payers.
A more recent update announced on 6 May 2021 by Tritax covered the current financial year to date. I believe these results also made for good reading. Demand remained high but Q1 was affected by the fact there wasn’t enough ready-to-occupy space available. This points to the busy year 2020 was for the logistics sector.
Tritax said over 99% of FY2020 rents had been collected and over 98% of FY2021 Q1 and Q2 rents had also been received, which is good. Furthermore, it reported new multi-million pound sites it had acquired that had already been snapped up in lucrative rental agreements with its clients. The FTSE 250 incumbent declared an interim dividend of 1.6p per share too a day after this trading update.
Best stocks to buy now carry risks too
I believe Tritax’s biggest issue is competition. In a thriving market, competition could lead to pricing pressure and in turn affect its balance sheet. There are many other players out there too. The other risk is around dividend growth. Dividend growth isn’t usually the best in REITs. In fact, Tritax’s full-year dividend for 2020, was 6% less than in 2019. There are better dividend payers out there on my best stocks to buy now list.
Overall, I do like Tritax and believe it is priced well, with an established business that is generating profit in a thriving market. Although the dividends aren’t the biggest, many FTSE firms have cut dividends altogether since the crash.
