Best Reits To Invest In Right Now – Four high-yielding REITs yield 4% or more today. We will discuss them in a moment.
Interest rates are rising and “conventional wisdom” says it’s a bad time to buy REITs because they behave like bonds. bad
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As the economy grows and these real rents are paid, the dividends will continue to disappear. period And we
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Research by S&P Global notes that rising interest rates “are often linked to economic growth and rising inflation, which can actually be a boon for the real estate sector. In particular…
While this is encouraging from a broad perspective, we obviously only want the best of the best. Let’s take a look at these generous dividend payers one by one.
Not surprisingly, Realty Income ( O ) is among the top quality REITs returning to the overall market.
Realty Income built its name on paying a monthly dividend. As I write this, O boasts a monthly dividend of 625, but of course I expect that to change in a few weeks…and every month after that. Plus, it’s dividend royalty, having grown its payout 116 times since going public in 1994, including 98 times quarterly growth.
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This combination of dividend longevity and improvement is made possible by a broad portfolio of over 11,000 properties, most notably under long-term net leases. The “net hire” part is important here. Income from real estate does not take care of insurance, they do not interfere with maintenance and taxes – tenants are responsible for all this.
The REIT is coming off a fantastic first quarter, in which revenue grew 82% and adjusted funds from operations (FFO, a key measure of real estate profitability) rose 14% year-over-year. But more importantly, Realty Income took a big step outside of its comfort zone. O announced in February that Wynn Resorts had agreed to acquire the Encore Boston Harbor Resort and Casino from WYNN ( WYNN ) for $1.7 billion under a long-term net lease agreement; if completed, it would be Realty Income’s first casino property.
It has long been a choice for stability and dividends, with yields (4%) often higher than the REIT sector average. But his newfound aggressiveness also brings the possibility of rapid growth into play.
Realty Income’s success is no exception. Before the recent rally, net rent REITs were already the real estate sector’s best performers, falling just over 6% compared to the FTSE NAR’s 18% decline.
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So it won’t surprise you when I tell you that another pure rental REIT, National Retail Properties ( NNN ), looks to be the perfect model in the universe.
NNN isn’t as big as real estate income, but it’s still big with nearly 3,300 rental properties for 370 tenants in 48 states and an occupancy rate of over 99%. No single tenant makes up more than 5% of the portfolio, and for those worried about sustainability, few will survive the apocalypse: 7-Eleven, BJ’s Wholesale, Fikes.
This has contributed to the steady growth of National Retail Properties’ dividend, which has improved every year for more than three decades. That includes a recent 3.8% rise to 55 cents a share on a quarterly basis.
Second-quarter earnings will be released soon, and the company hopes to build on a first-quarter increase in AFFO per share of 4% to 79 cents per share. Additionally, the company should see annual AFFO growth of more than 6%, Raymond James said. That’s a sign of strength — coupled with a 4%-plus yield — that should attract many investors for the rest of the year, especially if the market starts to slide again.
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Two acquired casino names should also be examined: Gaming and Leisure Properties (GLPI) and VICI Properties (VICI).
The first came to life in November 2013 when Penn National Gaming was spun off from PENN. While casinos may make you think of Las Vegas, none of GLPI’s 55 gaming and related facilities are located in Sin City, and in fact only three are located in Nevada. The remaining 52 are spread across 16 states, including Ohio, Maine and Louisiana.
VICI, also a spin-off of Caesars Entertainment CZR ( CZR ), boasts several Vegas attractions including Caesars Palace, Mandalay Bay, MGM Grand and The Venetian. But again, most of their portfolio is regional, covering Indiana, Mississippi and Massachusetts.
Pure gaming operators have struggled since the beginning of the bear market of the COVID-19 pandemic, and Las Vegas Sands ( LVS ) and Wynn Resorts ( WYNN ) are still worth about half of what they were a few years ago. But you wouldn’t know it if you looked at GLPI and VICI, where you splash money and live a lot.
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Gaming and Leisure Properties, for example, recently announced plans to buy two Bally’s properties, Bally’s Twin River Lincoln Casino and Bally’s Tiverton Casino & Hotel, for $1 billion, if they plan to buy the Hard Rock Hotel & Casino in Biloxi. gets Lincoln Casino does not close on time. (Even then, they have until the end of 2024 to buy Lincoln.) Raymond James notes that the deal should have an immediate AFFO benefit that would encourage the player to go with a 5%-plus yield.
In addition, VICI Properties closed its acquisition of MGM Growth Properties (MGP) in April, making the company the largest owner of hotels and conference properties in the United States. But this is unlikely to be achieved through capital release. The company will provide loans for the development of Great Wolf Resorts properties and the construction of future BigShots golf properties. And you can achieve it. Like many REITs, many of VICI’s leases have rental peaks, and RJ notes that about half of its leases will have CPI-related increases this year, which “should drive VICI’s internal growth to a higher position in terms of net income.” “
So you have two profit-oriented parts, both of which have significant growth potential. But what about cash? Traditional safe havens like bonds have been weakened by the highest inflation in 41 years and the fastest rise in interest rates in four decades.
I’m not sugar coating anything for you; The pain that started in 2022 may last until 2023.
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Why 2023? Because the Fed has made it clear that if it had to choose between beating the economy and beating inflation, it would “get the job done” and beat inflation.
Wall Street says it wants the Fed to turn around as soon as possible. He wants yesterday’s exchange rate to go down. He wants a return to loose monetary policy and a peaceful Fed that allows the economy to function.
This is what happened the last time the Fed gave Wall Street what it wanted. Here’s the last time the Fed blinked and said inflation “didn’t finish its job.”
If you thought we had a bad time today, it’s stagflation hell that UBS and Societe Generale are warning us that the Fed may turn around too soon.
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If the Fed quickly beats inflation, then investors will face a decade of strong gains after years of pain.
Do you think retirees are afraid of their pensions today? With inflation of 3%, 4%, or even 5%, a decade (or more) of funds going nowhere will be deadlocked.
Will things get worse in 2023? Certainly. By definition, capitulation represents the temporary death of investors’ hopes, the height of hopelessness and despair.
The good news? Once it becomes clear that the economy is heading into a recession and inflation is falling, long bonds may be the best safe haven, as they have been 92% of the time since World War II.
Are Real Estate Investment Trusts (reits) A Good Investment Right Now? The Pros And Cons
My intention to Dividend Kings readers and subscribers is not to lie to you. I’m not going to thumb my nose and tell you that undervalued blue chips will rise in a bear market.
My job is to explain this to you and prepare you for the emotional, financial and even spiritual (often debilitating ordeal) pain that lies ahead.
But when the pain goes away, the bull market begins and the hell market turns into heaven.
This is the real light at the end of the tunnel and the 10 best REITs for this downturn can help.
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It will help you sleep better at night during a downturn and cross the valley of doom and despair to the golden pinnacle of long-term success and generous and secure income.
Outside of the Great Recession, when high leverage and a declining credit market caused many real estate investment trusts (“REITs”) to cut their dividends, REITs have often been a good way to take advantage of safe, growing income in economic conditions.
In fact, REITs are great hedges against inflation outside of real bear markets (when stocks barely go up).
Even during periods of stagflation, REITs tend to outperform the market (though they fall less than the broader market).
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But as with any sector or asset class, safety and quality are essential if they are to be