6 Best REITs to Invest In Now 10/18/2024 | | | AI is already beginning to look quaint as we barrel toward Artificial General Intelligence - or AGI. It's time to prepare for this jump to lightspeed before it transforms life as we know it.
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Get the full report FREE right here. Click Here... | | | | Six best REITs to invest in now offer investors ways to obtain consistent dividend payouts and share-price appreciation.
The real estate market is starting to rebound from the headwinds of high interest rates, inflation and recession fears. With the Federal Open Market Committee (FOMC) cutting the federal funds rate on Sept. 18 by 50 basis point, or 0.50%, REITs are becoming an enticing investment with additional interest rate cuts expected during the next 18 months.
That cut in the target rate at which commercial banks borrow and lend their excess reserves to each other overnight is expected by forecasters to be followed by a further reduction of 50 basis points between the remaining two FOMC meetings this year. Additional cuts of 100 basis points in 2025 and 50 basis points in 2026 currently are anticipated to reach a rate of 2.9% that may hold through 2027.
6 Best REITs to Invest in Now Avoid Hassles of Direct Ownership of Real Estate
One of the big incentives in owning shares in real estate investment trusts (REITs) is that a shareholder does not need to fix any overflowing toilets, patch leaky roofs, repair holes in the walls caused by careless tenants, take complaints about loud neighbors, or carry out smelly garbage in bad weather. Instead, REITs offer a passive investment opportunity to gain exposure to the real estate market and collect dividend payouts without breaking a sweat.
If the Federal Reserve can keep inflation under control stop the economy from sliding into a recession, REITs should benefit. The following six REITs are among the best we can offer right now. Here is a brief description of each.
6 Best REITs to Invest In Now: Welltower Inc.
Welltower Inc. (NYSE: WELL)
Annual Dividend Yield: 2.04%
One of my late grandmother's favorite expressions was "Holy Toledo!" It seems like an apt way to start apprising you about Welltower Inc., a Toledo, Ohio-based based real estate investment trust that works with seniors housing operators, post-acute providers and health systems to fund the real estate infrastructure needed to scale "innovative care delivery models" and improve people's wellness and overall health care experience. Welltower owns interests in properties concentrated in major, high-growth markets in the United States, Canada and the United Kingdom. Those properties consist of seniors housing, post-acute communities and outpatient medical facilities.
BofA Global Research rates WELL as a buy and gives it a $129 price objective that is derived by running a five-year forward analysis of the REIT's growth prospects under various scenarios. The investment firm's base case implies a share price of $152 in 2028. Then BofA uses a discount rate of 4.28% (based on the 10-year Treasury rate as of February 26, 2024) to calculate its price target.
WELL might be able to top that price target with better-than-expected senior housing or medical office building performance, higher-than-forecast dividend growth and lower interest rates, BofA wrote. Reasons why the price objective might be missed include further public-pay reimbursement cuts, a more competitive acquisitions environment, weaker-than-expected senior housing fundamentals, increased tenant credit risk and a rise in interest rates instead of the current cutting environment.
Keys to WellTower's Success Include a New Operating Platform
BofA's main focus is on WELL's operating platform roll out. The operating platform went live with WELL's first operator in the third quarter.
"We are looking for signs of the uplift at the operator level," BofA analysts wrote in a recent research note. "A qualitative update during the earnings call will help us get a gauge of whether or not 2025 Street estimates are too low."
Anytime an investment firm ranks an equity as a buy and then wonders aloud whether Wall Street consensus earnings estimates are too low, investors can take that as good news that may not be fully reflected in the current share price. Optimism reigns about the soaring prospects for Welltower.
Chart courtesy of www.stockcharts.com
6 Best REITs to Invest In Now: AGNC Investment Corp.
AGNC Investment Corp. (NASDAQ: AGNC)
Annual Dividend Yield: 13.16%
Regulations require REITs to pay their shareholders at least 90% of taxable income, own properties that typically produce reliable rent payments and offer enhanced appeal because they have limited correlation to the stock market. A big fan of REITs as interest rates retreat is Bryan Perry, who leads the Cash Machine investment newsletter.
Perry wrote in his October 2024 issue of Cash Machine that real estate investment trusts, consumer staples and utilities were among those seeing strong inflows of investment capital. He followed up in his November 2024 newsletter to report that his recommendation of AGNC Investment Corp. already is profitable, aided by a dividend yield of 13.89%.
As one of the largest mortgage real estate investment trusts (mREITs), AGNC stands to benefit from potentially tighter mortgage spreads as fixed income volatility eases and rates begin to come down.
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AGNC's business revolves around investing in agency mortgage-backed securities. These investments are underwritten with collateralized borrowings in the form of repurchase agreements (REPOS), Perry explained. Interest is generated from the company's investments, and the difference after paying their borrowing costs is what funds the dividends, he added.
Investing in mREITs that borrow short-term REPOS and are leveraging 30-year investment grade agency mortgage-backed securities in a market where yields are trending lower has historically been a winning trade, as book values tend to rise in this environment, Perry continued. If the Fed does embark on a streak of rate cuts over the next year or so, liquid government debt instruments will appreciate, he wrote in Cash Machine.
With a reduced-rate environment, borrowing costs to service the leverage in the REIT's portfolio are lowered. That should translate into higher profit margins as the REIT locks in yields at current rates, Perry wrote to his subscribers.
"Let's put high long-term mortgage rates to work for us," Perry advised.
Chart courtesy of www.stockcharts.com
6 Best REITs to Invest In Now: Cohen & Steers Realty Shares (MUTF: CSRSX)
Cohen & Steers Realty Shares (MUTF: CSRSX)
Annual Dividend Yield: 2.59%
Bob Carlson, who heads the Retirement Watch investment newsletter, recently recommended Cohen & Steers Realty Shares (CSRSX) to his subscribers to help them profit amid the budding recovery of REITs.
REITs are bouncing back, helped by reduced interest rates and solid growth, Carlson wrote to his Retirement Watch subscribers. In addition, REITs sell at discounts to privately owned real estate and the stock market in general, he added.
CSRSX always has had a focused portfolio and now is seizing opportunities in key sectors, such as telecommunications, data centers and health care, Carlson continued. It is really the most sensible way to invest in artificial intelligence because it concentrates on the infrastructure, he added.
Bob Carlson, head of Retirement Watch, meets with Paul Dykewicz.
6 Best REITs to Invest In Now: Carlson's Call
Traditional commercial real estate is a small part of the fund, including hotels, shopping centers and office buildings. CSRSX dipped 2.73% in the last month, but rose 9.56% in the past three months, 13.84% for the year to date and 33.67% during the last year.
"A big advantage of CSRSX is that it doesn't track an index," Carlson wrote to his newsletter subscribers. "It determines which sectors of commercial real estate are likely to do well in the current economic environment and buys the highest-quality REITs in those sectors. That enables the fund to downplay office buildings, malls, shopping centers, and other lagging sectors in favor of data centers, telecommunications towers, health care and more."
CSRSX also buys relatively few REITs, focusing instead on its managers' best ideas, Carlson continued. Recently, CSRSX held 34 securities with the 10 largest positions, including Welltower, composing 63% of the fund. It offers a current dividend yield of 2.59%.
Chart courtesy of www.stockcharts.com | | | It's election season and some stocks are about to absolutely shock Wall Street.
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See The Forecasts for the Top 3 'Electionomics' Stocks > Click Here... | | | | 6 Best REITs to Invest In Now: Ares Management Corporation (NYSE: ARES)
Ares Management Corporation (NYSE: ARES)
Annual Dividend Yield: 2.20%
Mark Skousen and Jim Woods, the leaders of the Fast Money Alert advisory service, helped their subscribers earn profits of roughly 18% in about five months by recommending Ares Management Corporation (NYSE: ARES), a global alternative investment manager that offers clients complementary primary and secondary investment opportunities across the credit, real estate, private equity and infrastructure asset classes. ARES offers a modest dividend yield of 2.20%.
Ben Franklin scion Mark Skousen, who heads Fast Money Alert and Forecasts & Strategies, talks to Paul Dykewicz.
The REIT seeks to provide flexible capital to support businesses and create value for its stakeholders and within its communities. By collaborating across its investment groups, the REIT aims to deliver consistent and attractive investment returns throughout market cycles.
Jim Woods, a ex-U.S. Army paratrooper, leads Successful Investing and co-heads Fast Money Alert.
RBC Capital recently raised its price target on Ares Management to $170 from $150, while keeping an "outperform rating" on the shares, according to a research note previewing third-quarter results for U.S. Asset Managers. RBC wrote that fixed income organic growth in the sector likely will further improve sequentially during the third quarter.
Ares Management Corporation announced on Oct. 9 that it has priced an offering of $750,000,000 aggregate principal amount of its 5.600% Senior Notes due 2054. The notes will be fully and unconditionally guaranteed by Ares Holdings L.P. and its related business units.
Chart courtesy of www.stockcharts.com
6 Best REITs to Invest In Now: Digital Realty Trust (NYSE: DLR)
Digital Realty Trust (NYSE: DLR)
Annual Dividend Yield: 2.95%
Michelle Connell, the head of Portia Capital in Dallas, expressed support for Austin, Texas-based Digital Realty Trust (NYSE: DLR), a REIT that benefits from artificial intelligence (AI) and the growing needs of data centers. DLR is a global provider of cloud- and carrier-neutral data center, colocation, and interconnection solutions that recently announced it amended, extended and upsized its existing $3.75 billion senior unsecured multi-currency global revolving credit facility to $4.2 billion.
DLR owns 300 data centers across the world, putting an emphasis on providing sophisticated outsourcing services to companies that do not desire to make the expensive investment in large database centers, Connell counseled. REITs typically do well when interest rates are declining, and that includes DLR, she added.
In addition, due to the critical need for databases, DLR is less economically sensitive compared to other types of REITs, such as malls and hotels, Connell continued. For that reason, Connell said she would expect DLR to be more stable if interest rates are volatile compared to REITs involved with malls and hotels, she added.
"DLR has strong fundamentals," Connell commented.
Michelle Connell heads Portia Capital.
With a yield of nearly 3%, DLR has never missed a dividend payment, Connell continued. The REIT's share price has climbed 1.43% in the past month, 1.84% in the last three months, 22.51% so far this year and 35.47% in the past 12 months.
"While DLR is up 22% year to date, I believe it still possesses upside of 10-15% over the next 12 months," Connell predicted.
Several Wall Street analysts have recently increased their price targets on DLR, added Connell, who advised investors to establish a position at this point and add to it on pullbacks.
Chart courtesy of www.stockcharts.com
6 Best REITs to Invest In Now: American Healthcare REIT Inc. (NYSE: AHR)
American Healthcare REIT Inc. (NYSE: AHR)
Annual Dividend Yield: 3.97%
BofA Global Research rates American Healthcare REIT Inc. (NYSE: AHR) as a buy and put the REIT on its elite "US1 list." The investment firm was so impressed with AHR that it wrote that there is room for heightened financial guidance from the REIT's management.
"We believe the exercise of the Trilogy purchase option offers benefits beyond the initial accretion," BofA wrote. "Further education on how Trilogy can drive earnings growth will drive a re-rating higher in the stock, in our view. Across the sector, acquisition volumes and cap rates were ahead of our expectations last quarter."
American Healthcare REIT Inc. received a $31 price objective from BofA, which applied a 24.5x adjusted funds from operations (AFFO) multiple to the investment firm's 2025 AFFO estimate.
"Our applied multiple is based on AHR's relative mix of health care real estate exposure and our view on its portfolio quality relative to publicly traded peers," BofA explained. "For AHR, our main focus is on reimbursement dynamics following CMS [Centers for Medicare and Medicaid] star rating print of Medicare Advantage plans and if this shifts Trilogy's payor mix going forward (shifting towards more Medicare vs Medicare Advantage). We are also focused on how Trilogy offers benefits to AHR beyond just initial accretion."
AHR recently acquired the remaining minority interest in Trilogy Holdings, becoming the sole owner of Trilogy Holdings and its Integrated Senior Health Campuses. However, BofA wrote that AHR's reliance on Trilogy and government reimbursement adds risk due to exposure to the skilled nursing facility sector.
Chart courtesy of www.stockcharts.com
6 Best REITs to Invest In Now: Summary
The six real estate investment trusts to buy offer enticing opportunities to profit from the Fed's planned rate cuts, despite ongoing wars in Ukraine and the Middle East. The high likelihood of multiple rate cuts for the next 12-18 months puts these positions in a positive light for those seeking to pump up their portfolios with rising share prices and attractive dividend payouts. | | | Sincerely,
Paul Dykewicz, Editor
DividendInvestor.com
| | About Paul Dykewicz: Paul Dykewicz is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul also is the author of an inspirational book, "Holy Smokes! Golden Guidance from Notre Dame's Championship Chaplain", with a foreword by former national championship-winning football coach Lou Holtz. Follow Paul on Twitter @PaulDykewicz. | | | | | |
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