3/8/25

Four Corners Property Trust (NYSE: FCPT) is a net-lease real estate investment trust (REIT) that specializes in owning restaurant and retail properties across the country. It was spun off from Darden Restaurants in 2015 and has since built a strong portfolio of properties leased to well-known brands.

With a market cap of $2.93 billion and a stock price hovering around $29.31, FCPT appeals to income-focused investors looking for stable dividends. The company’s strategy revolves around long-term leases with creditworthy tenants, which provides predictable rental income.

For investors who prioritize dividend income, FCPT presents an intriguing opportunity. Let’s take a closer look at its dividend metrics, financial stability, valuation, and risks to consider.

Key Dividend Metrics

📌 Dividend Yield: 4.84% – A solid yield, though slightly below its five-year average.
📌 Annual Dividend: $1.42 per share – A steady payout that has grown over time.
📌 Payout Ratio: 129.91% – A concerning number that suggests dividends exceed earnings.
📌 Dividend Growth: Regular increases, but at a slower pace recently.
📌 Ex-Dividend Date: December 31, 2024 – Important for those looking to capture the next payout.

Dividend Overview

FCPT has made dividends a priority, offering a yield of 4.84%. That’s higher than what most stocks in the broader market provide, making it attractive for income investors. However, the payout ratio of nearly 130% raises some concerns. Typically, REITs distribute most of their cash flow to shareholders, but a payout exceeding 100% of earnings suggests the company may be relying on funds from operations (FFO) rather than net income to sustain its dividend.

The company has steadily increased its dividend over the years, but the pace has slowed, likely due to economic conditions and rising interest rates. While FCPT remains committed to its dividend policy, future growth may be more modest.

Dividend Growth and Safety

FCPT’s dividend is stable, but how safe is it in the long run?

✅ Revenue growth is steady at 4.9% year-over-year, which supports ongoing payments.
✅ Operating cash flow of $144.1 million suggests a strong ability to cover dividends.
🚩 A payout ratio above 100% raises concerns about long-term sustainability.
🚩 Debt levels are notable, with a total of $1.14 billion outstanding.

The company’s cash flow is sufficient to support dividends for now, but with a high payout ratio and significant debt, there’s less room for future increases. Management will likely take a balanced approach, ensuring financial stability while maintaining investor payouts.

Chart Analysis

Price Movement and Trend

Four Corners Property Trust (FCPT) has been in an overall uptrend over the past year, with some notable pullbacks along the way. The stock recently closed at $29.31, testing previous highs from earlier in the chart. The 50-day moving average (blue line) has been relatively flat for the past few months but is now starting to turn upward, which suggests growing momentum. The 200-day moving average (dark blue line) remains in a steady uptrend, reinforcing the idea that the longer-term trajectory is still bullish.

A key observation is the stock’s ability to hold above its 200-day moving average during previous pullbacks. Each time FCPT tested this level, buyers stepped in, which indicates strong demand at those lower price levels. The recent breakout above the 50-day moving average further strengthens the bullish sentiment.

Volume and Market Participation

Volume has fluctuated significantly, with notable spikes around late September and December. The high-volume days in those months indicate that institutions or large investors were either accumulating or distributing shares aggressively. The latest rally toward $29+ has been accompanied by steady, moderate volume, which suggests that the move is sustainable rather than a short-term spike.

It’s also worth noting that the volume has tapered off slightly compared to the more volatile periods last year. This could mean the stock is in a phase of consolidation before making its next decisive move. If volume increases while the price continues to rise, that would be a strong confirmation of further upside.

Relative Strength Index (RSI) and Momentum

The RSI indicator at the bottom of the chart is trending higher but hasn’t yet reached overbought territory (above 70). This suggests that while FCPT has been gaining strength, there’s still room for further upside before the stock becomes overheated.

Earlier in the year, RSI showed some weakness, coinciding with the stock’s pullback below $27.50. However, it has steadily climbed since then, mirroring the stock’s recovery. The fact that RSI remains in the 50-70 range indicates that momentum is positive but not at extreme levels, which could support a continuation of the current trend.

Recent Candlestick Activity

The last five candlesticks show a series of higher closes, indicating consistent buying interest. The most recent candle had a small upper wick, which suggests that sellers attempted to push the price down but were met with strong demand. This signals that buyers remain in control.

There was some intraday volatility, as seen by the price range between $28.74 and $29.46, but the stock managed to close near its high. This is generally a positive sign, as it suggests that investors were willing to hold their positions into the close, rather than taking profits early.

Support and Resistance Levels

The key resistance level is around $30.00, which was tested in previous months but failed to hold. If FCPT can break above this level with strong volume, it could indicate further upside.

On the downside, the $27.50 area appears to be a solid support level, reinforced by the 200-day moving average. If the stock were to pull back, this would be the critical level to watch for potential buying interest.

Analyst Ratings

📈 Upgrades

✅ In March, FCPT received a credit rating upgrade to BBB, reflecting its improved financial stability and efforts to diversify its portfolio. The company has actively reduced tenant concentration, which has strengthened its overall risk profile.

✅ The Relative Strength (RS) Rating for FCPT recently climbed from 67 to 73, signaling improved technical performance. This suggests that the stock has been outperforming a significant portion of the market, which is often a positive signal for momentum investors.

📉 Downgrades

🔻 Barclays revised its price target for FCPT from 31 to 30, maintaining an equal weight rating. The adjustment reflects a more neutral stance on the stock, suggesting that while FCPT remains a solid player in the REIT sector, its upside potential might be limited in the short term.

🔻 Wells Fargo initiated coverage with an overweight rating and a price target of 28. This cautious outlook implies that while FCPT is fundamentally strong, valuation concerns and external market factors may limit near-term gains.

🎯 Consensus Price Target

📌 Analysts collectively place FCPT’s 12-month price target around 29.75, indicating a modest upside from current levels. This target reflects a balanced mix of bullish and cautious projections, highlighting a steady but measured growth trajectory for the stock.

These recent analyst adjustments underscore the importance of considering both company fundamentals and broader market conditions when evaluating FCPT’s investment potential.

Earnings Report Summary

Four Corners Property Trust (FCPT) just wrapped up another solid year, reporting steady growth and a strong financial position. The company’s fourth-quarter and full-year results show a well-managed real estate portfolio that continues to generate reliable income.

Revenue and Earnings

FCPT pulled in $60.7 million in rental revenue for the fourth quarter, marking a 5.3 percent increase from the same time last year. For the full year, total revenue climbed to $268.1 million, up from $250.6 million in 2023. On the earnings side, net income came in at $26.2 million for the quarter, or $0.27 per share, holding steady with last year’s performance. Over the entire year, net income reached $100.5 million, or $1.07 per share, showing a modest gain over 2023’s numbers.

Funds from Operations and Adjusted FFO

For REIT investors, FFO is a key metric, and FCPT delivered consistent results. Fourth-quarter FFO was $0.41 per share, the same as the previous year. On an annual basis, FFO per share ticked up slightly to $1.65 from $1.62. Adjusted FFO, which gives an even clearer picture of cash flow, increased slightly as well, coming in at $0.44 per share for the quarter and $1.73 for the full year.

Expanding the Portfolio

FCPT was busy on the acquisition front in 2024, adding 87 new properties to its portfolio, investing $264.6 million in new real estate. The company locked in favorable deals, with an initial yield of 7.1 percent and an average lease term of nearly 12 years. Just in the fourth quarter, they acquired 45 properties, spending $132.5 million, with a 7.0 percent yield and lease agreements averaging 12.4 years.

High Occupancy and Stable Rental Income

As of the end of 2024, FCPT owned 1,198 properties across 47 states, covering 8 million square feet. Occupancy remained incredibly strong at 99.6 percent, a testament to the quality of its tenants and lease agreements. The portfolio’s average lease length stands at 7.3 years, providing long-term rental stability.

Dividend Growth

FCPT continued rewarding shareholders, increasing its dividend to $0.3550 per share for the quarter, a 2.9 percent increase from the previous payout. That brings the annualized dividend to $1.42 per share, maintaining the company’s reputation as a steady dividend payer.

Liquidity and Capital Strategy

To fuel future growth, FCPT raised $102.3 million in the fourth quarter by selling 3.6 million shares at an average price of $27.92 per share. By the end of the year, the company had $347 million in available liquidity, including cash on hand, expected proceeds from forward sale agreements, and a large credit facility.

With steady earnings, a growing portfolio, and a well-covered dividend, FCPT continues to execute its strategy of stable, long-term growth in the net-lease REIT space.

Financial Health and Stability

A company’s ability to maintain dividends depends on its overall financial strength. Looking at FCPT’s numbers provides some insight into how well-positioned it is.

• Profitability
  • Profit margin: 37.48% – A solid figure for a REIT.
  • Operating margin: 56.15% – Indicates strong cost efficiency.
• Balance Sheet
  • Total Debt: $1.14 billion – Manageable, but slightly high.
  • Total Cash: $24.81 million – Limited cash on hand for flexibility.
  • Current Ratio: 0.50 – Suggests that liquidity could be tighter than ideal.
• Return Metrics
  • Return on Assets (ROA): 3.65% – Somewhat low.
  • Return on Equity (ROE): 7.42% – Decent, but not remarkable.

The numbers show a well-run company with a strong operating model, but the balance sheet has some weaknesses. Debt levels are notable, and the company doesn’t have a huge cash cushion, meaning financial flexibility is somewhat limited.

Valuation and Stock Performance

Stock valuation helps determine if FCPT is an attractive buy right now.

• Trailing P/E Ratio: 27.39
• Forward P/E Ratio: 25.91
• Price-to-Book Ratio: 2.02

These figures suggest that FCPT is not a deep value stock but trades at a fair valuation for a high-quality net-lease REIT. Shares have risen nearly 20% from their 52-week low, indicating strong investor confidence.

The enterprise value-to-EBITDA ratio sits at 19.88, which is reasonable but not a bargain. The stock’s momentum remains positive, with the 50-day and 200-day moving averages signaling a steady uptrend.

Risks and Considerations

No investment comes without risk, and FCPT is no exception. A few factors stand out:

🔻 The high payout ratio of 129.91% means dividend growth may be limited.
🔻 As a REIT, FCPT is sensitive to interest rate changes, which can impact borrowing costs.
🔻 The company’s reliance on restaurant tenants means any downturn in the industry could affect cash flow.
🔻 Growth has been steady but slow, with revenue increasing only 4.9% year-over-year.

Despite these risks, the company’s long-term leases and stable rent collections provide a strong foundation that should support dividends moving forward.

Final Thoughts

Four Corners Property Trust has positioned itself as a reliable dividend-paying REIT, offering a 4.84% yield backed by steady rental income. While its balance sheet shows some leverage, the company’s long-term lease structure provides stability.

For investors focused on dividend income, FCPT offers consistency rather than rapid growth. While future dividend hikes may be modest, the company remains a solid option for those seeking steady cash flow in a well-managed real estate investment trust.