Tag: REITs

4 Equity REITs Paying High Yields Over 10%

by Fred Fuld III

Investors continue to look for high yields on their money. One option that many consider are high yield equity REITs.

A REIT is a Real Estate Investor Trust. A REIT is a company that owns and typically operates income-producing real estate or related assets, such as real estate mortgages.

Properties may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans.

REIT Office Building
Office Building in a REIT

Unlike other real estate companies, a REIT does not develop real estate properties to resell them. Instead, a REIT buys and develops properties primarily to operate them as part of its own investment portfolio.

REITS are required to pay out at least 90% of their taxable income to shareholders as dividends each year. However, most REITS pay out at least 100 percent of their taxable income to their shareholders. 

The big advantage of REITs is that they avoid double taxation. They are generally not taxed at the corporate level, unlike corporations.

This tends to boost the payout rates for REITs, compared to stocks that are registered as corporations.

There are two primary types of REITs: equity REITs and mortgage REITs.

Equity REITs own the actual buildings and land.

Mortgage REITs own mortgages on the properties. Last week, we published an article on large cap stocks paying over 10% which included some mortgage REITs.

Our researchers have turned up four equity REITs that are currently yielding over 10%.

High Yield Equity REITs

Office Properties Income Trust (OPI)  owns, operates, and leases properties to single tenants especially those with excellent credit such as government entities. The annual dividend rate is 11.18%, payable quarterly, and the stock is trading at 65% of book value. Quarterly revenue growth was 2% year-over-year. Earnings have dropped.

Presidio Property Trust (SQFT), which has a great stock ticker symbol, is diversified both geographically and by real estate type, with a portfolio that includes office, industrial, retail and model home residential properties.

The stock pays a dividend yield of 13.59% and the price to book value is 0.21. Earnings per share growth this year was 45.4%; however revenues have been down.

Global Net Lease (GNL) pays a 10.69% yield. Quarterly revenue growth was up 8.6% year-over-year. Quarterly earnings growth rose by an incredible 571.5% year-over-year.

The company has a a diversified global portfolio of commercial properties in the United States and Europe.

Generation Income Properties (GIPR) has a diversified portfolio of office, industrial and retail high quality single tenant properties. The stock pays 10.39%.

Quarterly revenues were up 33.3% and quarterly earnings increased by 71.9%.

Don’t forget to check out the article on stocks going ex-dividend in August.

Disclosure: Author didn’t own any of the above at the time the article was written.

The Best Way to Invest in Real Estate: Top Residential REITs

by Fred Fuld III

Let’s say that you want to invest in real estate. You don’t want to buy single family residences, because prices are too high and you don’t want to deal with leaky toilets and other management issues. Even if you have a property manager, you still have to deal with rental problems indirectly.

You might want to consider Real Estate Investment Trusts, most commonly referred to as REITs (pronounced “reets”). However, there are many different kinds of REITS, such as hotel REITs and industrial REITs. REITs pass through most of the rental income to investors, avoiding taxation at the corporate level.

Many investors are staying away from office building REITs, since so many people are working from home now and companies don’t need as much office space.

Other REITs that some investors are avoiding are retail REITs, as many retail shops have closed up and more and more people are buying online instead of through brick and mortar locations.

So investors have been looking at residential REITs which own apartment buildings. If people can’t afford to buy a home, they have to live somewhere, and apartments are usually the best option.

The largest REIT by market capitalization is Equity Residential (EQR) with a market cap of $29.568 billion. The company has a price to earnings ratio of 45  and pays a yield of 2.27%.

Running a very, very close second is AvalonBay Communities (AVB) at a market cap of $29.537 billion. It has a P/E ratio of 37 and has a dividend rate of 2.96%.

Invitation Homes (INVH) is in the business of leasing single-family homes. It sports a market cap of $21.2 billion and a P/E ratio of 105.  It pay a yield of 1.7%.

Essex Property Trust (ESS) has a $19.5 billion market cap. It trades at 43 times earnings and the yield is 2.69%.

You might want to check and see if your portfolio has a home for a residential REIT.

 

Disclosure: Author didn’t own any of the above at the time the article was written.