In an uncertain market, real estate is a strong play and you don’t need to be the deed holder to get in the game.
When you are the property owner, shifting real estate values, problem tenants, property maintenance and more can erode your margins.
Real estate investment trusts, or REITs, do not have this limitation. They hold vast stores of different property types, much of it commercial. High-rise office buildings, malls, and more are represented but that’s not the best part.
REITs are required to distribute 90% of the net earnings they receive, so you also get dividends. Plus, the returns on REITs can be higher than bonds or even some stocks.
According to Kiplinger, “The average property REIT recently yielded 4.1%, well above the 2.4% yield of a 10-year Treasury bond and the 2% payout rate of Standard & Poor’s 500-stock index.” That is a significant difference, especially if you are an income investor.
But, that doesn’t mean that all REITs are equally profitable.
Right now, there are roughly 165 different REITs with market caps over $250 million in which you can invest. Here are seven of our favorite real estate investment options and why.
American Tower (NYSE: AMT) is one of the biggest REITs in the world and one of the most successful.
This company owns, develops, and oversees real estate for communications companies, specifically communications towers. Plus, most of its sites are multi-tenant, so they serve more than one company.
Right now, American Tower (NYSE: AMT) offers a dividend yield just under 2%. For the past five years, the company has grown at a rate of over 16% per annum, and it doesn’t look like it is slowing down.
Consensus estimates put current quarter sales growth at 19.7% and current year sales growth at 10.4%.
Crown Castle (NYSE: CCI) is a lot like American Tower, in that it is also involved with communications towers.
However, that is not this company’s only business. While CCI owns and operates more than 40,000 towers, it is also involved in fiber with some 65,000 route miles of the communications technology currently installed as well as various rooftop antenna and wireless infrastructure systems.
CCI offers a dividend north of 4% at the time of our research. Over the past five years, the stock has grown at 19.67% per annum and consensus estimates look for that trend to continue.
Forecasts put Crown Castle’s growth at 32.7% this year and 20.90% next year. Plus, the company beat on 3Q18 earnings estimates and raised its outlook for the year, suggesting its growth could be even higher.
Equinix (NASDAQ: EQIX) is in the data center business. Specifically, the REIT owns the land the facilities are on, manages the power they use, and provides security for those systems.
Equinix oversees these data center facilities and functions for more than 9,800 companies over five continents.
The REIT carries a 2.4% dividend yield, but the company could see massive growth. Consensus estimates are predicting growth in the neighborhood of 46.3% this year and 42.1% next year.
Analysts are more conservative going forward they put the average per annum growth at 10.89% for the next five years, but there could still be room to get in before the swell.
Prologis (NYSE: PLD) is one of the leading owners of warehouse distribution centers in the world.
The facilities this company owns are in popular coastal areas, like New York and Los Angeles, and they are vital to managing the logistics for retailers of all sizes, especially as many adopt buy online, pick up or return in-store options.
Prologis also boasts a 97% occupancy rate.
Prologis has a dividend yield of 2.87%. The REIT beat on 3Q18 estimates, bringing in rental revenues of $609 million versus $531.2 million in the same quarter last year after adding one million square feet of rental space in the past year. Occupancy in its portfolio is strong at 97.5% overall.
Public Storage (NYSE: PSA) is the largest self-storage company in the United States. It has over 2,400 properties spread throughout America and Europe.
The bulk of its business is in the US. Public Storage has 161 million square feet of rentable space stateside versus 12 million in Europe.
The company also invests in the industry. Public Storage has a common equity interest in PS Business Parks (NYSE: PSB) and its stake is significant at 42%.
This company is trading with a dividend yield of 3.85%, which makes it one of the higher dividend yields on this list.
Consensus estimates are predicting 12.5% growth this year and an average 17% annual growth over the next five years.
The Simon Property Group (NYSE: SPG) is known for its shopping centers.
The company owns and operates some of the most lucrative malls and outlet shopping in the United States. It also owns property in Europe and Asia.
Online shopping might be a significant trend or even a way of life for many shoppers but bargain hunters still travel to brick-and-mortar stores and there is no sign that this trend is changing for the Simon Property Group.
Thanksgiving weekend 2019 saw a 2% increase over the same weekend in 2018. CEO David Simon noted that some luxury brands saw sales increases that were several times that of last year, posting numbers that were as much as 30% higher. Plus, many stores topped their own estimates.
The company offers a dividend yield of 4.32%.
Weyerhaeuser is a REIT that specializes in forest products. It owns 12.4 million acres of timberland and leases another 7 million acres of the same.
The company uses that timber to manufacturer wood products like plywood and lumber for home construction.
Weyerhaeuser develops its lands with an eye towards sustainability and has earned a spot on the World Dow Jones Sustainability Index for its efforts.
Shares in the REIT are priced at $26.84 and the dividend yield is currently at 5.17%.