Four Corners Property Trust (FCPT): A Steady Dividend Beacon in a Volatile Market

Four Corners Property Trust (NYSE: FCPT) has reaffirmed its status as a dividend stalwart with its second-quarter 2025 declaration of a $0.3550 per-share payout, annualizing to a 5.1% yield. This marks the latest step in a decade-long track record of consistent dividend growth, now paired with strategic acquisitions in recession-resistant sectors like healthcare and essential retail. For income investors, FCPT's blend of defensive real estate holdings and disciplined capital allocation positions it as a compelling play for steady returns amid economic uncertainty.

Dividend Consistency Amid Growth

FCPT's dividend history is a model of reliability. Since its 2016 IPO, the REIT has increased its payout annually, with the annualized dividend per share rising from $0.97 in 2016 to $1.42 in 2025—a 46% increase over nine years. This growth trajectory reflects management's focus on maintaining a sustainable payout ratio (currently below 80%) while expanding its portfolio.

The second-quarter 2025 dividend aligns with FCPT's quarterly payout schedule, with the record date set for June 30 and payment due July 15. Investors can anticipate further stability: FCPT's 99.6% occupancy rate and a weighted average lease term of 7.6 years (as of Q2 2025) underscore the predictability of its cash flows.

Historically, short-term timing around dividend dates has proven perilous. A strategy of buying 5 days before each record date and holding until payment (2016–2024) underperformed severely, posting a -95.38% return with a maximum drawdown of -97.11%. This underscores the risks of overleveraging dividend timing and reinforces the merits of a buy-and-hold approach that capitalizes on FCPT's dividend growth and portfolio durability.

Strategic Acquisitions in Resilient Sectors

FCPT's recent property purchases highlight its strategy of diversifying into sectors insulated from economic cycles. Key transactions include:

1. Healthcare Sector Expansion:
2. Acquired nine American Family Care urgent care facilities in Alabama and Tennessee for $21.2 million. These properties operate under long-term, triple-net leases averaging 14 years remaining, with corporate guarantees shielding FCPT from tenant defaults.
3. Added two Riverview Health outpatient facilities in Indiana ($13.5M), leased for 12 years on average and priced at a 7.3% cap rate—within FCPT's disciplined valuation parameters.

1. Essential Retail & Automotive Services:
2. Secured four Christian Brothers Automotive properties ($16.9M) and three Express Oil Change locations ($9.5M), all in prime retail corridors with corporate-backed leases.
3. Expanded into quick-service dining with an Outback Steakhouse acquisition in Oklahoma, balancing shorter-term leases with geographic diversification.

These moves reinforce FCPT's focus on defensive sectors (healthcare, automotive services, and essential retail) that thrive during both booms and busts. Such assets are critical as interest rates rise and consumer spending shifts toward necessity-based spending.

Mitigating Risks Through Portfolio Engineering

FCPT's acquisition strategy is underpinned by three pillars:
- Long-Term Leases: Over 80% of its portfolio is leased to corporate tenants with terms of 10–15 years, minimizing turnover risk.
- Cap Rate Discipline: Recent deals trade at 6.5%–7.3% cap rates, aligning with historical averages and avoiding overvaluation.
- Low Leverage: With a debt-to-asset ratio of 30%, FCPT maintains flexibility to pursue acquisitions even amid rising borrowing costs.

This structure positions FCPT to weather economic headwinds. For instance, triple-net leases often include rent escalators (e.g., 2.5% annual increases in auto service leases), insulating cash flows from inflation.

Investment Case: Income and Appreciation Potential

FCPT's 5.1% dividend yield currently outperforms peers like Realty Income (4.5%) and Welltower (3.8%), offering income investors a compelling entry point. Additionally, its portfolio's 99.6% occupancy and dividend growth trajectory suggest upside for capital appreciation.

Key Considerations for Investors:
- Dividend Sustainability: The payout ratio remains conservative, with ample room for growth as occupancy and lease terms hold firm.
- Sector Diversification: Healthcare and automotive services now account for 15% of FCPT's portfolio, reducing reliance on traditional retail.
- Macro Resilience: Defensive sectors like healthcare and auto repair are less sensitive to economic slowdowns, making FCPT a “recession hedge.”

Conclusion: A Solid Bet for Defensive Investors

Four Corners Property Trust's second-quarter dividend declaration and strategic acquisitions in healthcare and essential retail underscore its role as a reliable income generator. With a fortress balance sheet, disciplined capital allocation, and a portfolio engineered for stability, FCPT is well-positioned to deliver consistent returns even in volatile markets. For investors seeking a dividend yield above 5% paired with capital preservation, FCPT merits serious consideration.

Disclosure: The author holds no positions in FCPT at the time of writing.