Finding the right real estate investment trusts (REITs) to buy really boost your portfolio – particularly if you’re eager for a regular income stream.
REITs are popular for investors who favor dividend stocks because they’re a special class of investment that gets preferential tax treatment. As part of that arrangement, however, the REIT must return 90% of taxable income back to shareholders.
The best REITs to buy provide some of the best dividend ratios that you can find in the market. When the economy is cooking, many REITs are a can’t-miss investing opportunity.
But what about now, when the economy is struggling, mortgage rates are elevated, and brick-and-mortar retailers are watching their customers turn to e-commerce?
Never fear – there are still some great REITs to buy today. You just need a little help to guide you – and that’s where my Portfolio Grader comes in.
| CPT | Camden Property Trust | $134.58 |
| HST | Host Hotels & Resorts | $18.02 |
| PLD | Prologis | $129.49 |
| PSA | Public Storage | $342.20 |
| REXR | Rexford Industrial Realty | $64.73 |
| CUBE | CubeSmart | $47.49 |
| EXR | Extra Space Storage | $204.18 |
Camden Property Trust (CPT)
The coronavirus pandemic hurt a lot of companies, but Camden Property Trust (NYSE:CPT) wasn’t one of them. The Houston-based REIT focuses on its apartment complexes in the southeastern U.S., where remote workers were more eager to live.
That should continue for a while, making this one of the best apartment-complex RIETS to buy. Camden Property Trust is expected to have a double-digit increase in funds from operations (FFO) this year – and FFO is the REIT equivalent to earnings.
Earnings for the second quarter included revenue of $361.72 million, while analysts had expected $340.13 million. Earnings per share of 22 cents were worse than analyst expectations of 33 cents per share.
CPT carries a solid dividend ratio of 2.8%. Combined with its reliable earnings history, CPT gets a “B” rating in the Portfolio Grader.
Host Hotels & Resorts (HST)
Host Hotels & Resorts (NASDAQ:HST) bills itself as the world’s biggest hotel and lodging REIT. It focuses on properties in high-traffic business districts and on coastlines.
Properties include locations in Miami’s South Beach, San Fransisco, Boston, Chicago, Washington, D.C., Honolulu, and more.
Vacations weren’t a high priority for people during the coronavirus pandemic. People were worried about either finding a safe, temporary place to be outside densely populated cities. Now that travel is beginning to pick up and business conferences and conventions are resuming, it’s more likely for top hotels to be in demand once again.
HST stock has been on a roll in recent quarters and that is expected to continue. Revenue for the second quarter came in at $1.38 billion, which was more than the $1.26 billion that analysts expected. EPS of 36 cents per share was also a pleasant surprise, better than the 25 cents per share the Street expected, making it among the more intriguing travel REITs to buy.
HST stock also offers a solid dividend ratio of 2.7% which is just another reason why it gets a “B” rating in the Portfolio Grader.
Prologis (PLD)
Prologis (NYSE:PLD) is a REIT that leases warehouse properties. It owns more than 4,700 buildings totaling more than 1 billion square feet, and it has $180 billion in assets under management.
E-commerce has been a huge tailwind for PLD stock – after all, manufacturers need somewhere to store stuff before it gets shipped to you. Even though e-commerce slowed in 2022, there are strong indications that Prologis will continue to profit.
Earnings for the second quarter bore that out. Prologis narrowly topped analysts’ earnings for $1.09 billion in revenue, but it destroyed EPS expectations, earning 82 cents per share versus expectations of 66 cents per share.
On top of that, PLD stock has a dividend ratio of 2.5%. Prologis has a “B” rating in the Portfolio Grader.
Public Storage (PSA)
If you particularly think that the U.S. is headed toward a recession, then Public Storage (NYSE:PSA) should be on top of your list of REITs to buy.
As a leader in the self-storage industry, PSA seems to be in a prime position to profit from high inflation and the challenges of a rising interest rate environment.
One thing that makes Public Storage different from other REITs is its method to raise capital. PSA uses preferred stock for that function, which allows it to obtain financing that never matures, and comes in at around 4%.
Earnings in the second quarter were nothing to worry about – revenue of $1.03 billion and EPS of $3.42 beat analysts’ expectations for $1.01 billion revenue and EPS of $2.54. PSA stock also gives investors a 2.4% dividend yield.
All in all, PSA stock has a “B” rating in the Portfolio Grader.
Rexford Industrial Realty (REXR)
Rexford Industrial Realty (NYSE:REXR) has some similarities to Prologis. Focused on industrial properties in southern California, Rexford owns warehouses that stores cargo that comes in by sea to ports in Los Angeles and Long Beach, California.
Trade between China and the U.S. continues to be a sore point, and that’s surely affecting REXR stock. Revenue in the second quarter was a disappointment, coming in at $149.12 million while analysts were expecting $149.21 million.
But that may mean that REXR stock, which is down 19% so far this year, could be a great bargain. And while you’re waiting for those profits, REXR stock offers a 2% dividend yield.
Rexford Industrial Realty has a “B” rating in the Portfolio Grader.
CubeSmart (CUBE)
Rather than being an industrial REIT like some names on this list, CubeSmart (NYSE:CUBE) is a business-to-consumer (B2C) company that rents storage spaces to individuals.
Customers flock to CubeSmart if they’re moving, downsizing, or need a temporary or permanent storage solution for household or business items. And of course, storage units are also popular for treasure hunters thanks to some reality TV shows like Storage Wars.
Earnings for the second quarter were mixed. Revenue of $248.66 million narrowly missed analysts’ expectations of $248.91. But earnings per share of 26 cents was better than the 24 cents per share that the Street expected.
CUBE stock is down 9% so far this year, but it offers a 2.4% dividend yield. That’s why it gets a “B” rating in the Portfolio Grader.
Extra Space Storage (EXR)
Talk about rinse and repeat – Extra Space Storage (NYSE:EXR) has a lot of similarities to CubeSmart. But it’s more than twice as big (by market capitalization), and that gives it a little extra stability.
The Utah-based company operates more than 2,000 self-storage facilities in 41 states, totaling about 1.4 million units.
Earnings for the second quarter included revenue of $379.81 million – better than the $368.88 million that analysts predicted – and EPS of $1.51 – that’s 18 cents better than predicted.
Despite rising 13% over the last three months, EXR stock is still down 10% for the year. But with a 3% dividend yield, it still has a “B” rating in the Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.