3 High-Yield REITs for Income Investors to Buy to Fight Coronavirus Volatility

The coronavirus, which continues to spread around the world and in the U.S., already ended the 11-year bull market. Selling and volatility look poised to remain amid increasing uncertainty, even with the Dow, the S&P 500, and the Nasdaq all down roughly 30% from their mid-February highs.

With that said, some investors might want to hunt for stocks to buy, or at least add to watchlists. But amid the uncertainty that has seen Nike NKE, Apple AAPL, and other giants close their stores, and the travel and hospitality industries come to a halt, investors need to be more selective.

Today, we are looking to add income, with the yield on the 10-year U.S. Treasury at 1.07%. And Real Estate Investment Trusts are a solid place to start. REITs are companies that own, operate, or finance real estate properties that produce income, such as apartment complexes or retail locations.

We should note that instead of earnings, REITs report funds from operations or FFO, but investors can view them as essentially the same for our purposes. Plus, one distinct advantage is that REITs must pay at least 90% of their taxable income in dividends to shareholders.

Now, let’s dive into three high-yield REITs that investors might want to buy to help add income amid the coronavirus market downturn…

Spirit Realty Capital, Inc. SRC

Spirit Realty is a net lease REIT that invests mostly “in high-quality, operationally essential retail real estate, subject to long-term, net leases.” SRC’s clients include Walgreens WBA, CVS CVS, and other retail, distribution, and service-oriented firms, many of which look poised to remain running during the coronavirus spread that has seen many bars and restaurants close. Overall, the firm’s portfolio featured 1,752 properties and 43 properties securing mortgage loans, as of the end of 2019.

Spirit Realty topped our fourth quarter fiscal 2019 FFO and sales estimates at the end of February. But, as many might have guessed, the stock has tumbled over the last month, down 60%. The stock was trading at $54 a share a month ago and now rests at roughly $22 a share. This has helped make its dividend yield all the more attractive.

SRC currently pays an annualized dividend of $2.50 a share, for a 11.50% yield, which blows away its industry’s 3.66% average. Looking ahead, our Zacks estimates call for Spirit Realty’s revenue to jump 15.5% and 10%, respectively in fiscal 2020 and 2021. Plus, its positive earnings estimate revision activity helps it earn Zacks Rank #2 (Buy), alongside its “A” grade for Momentum in our Style Scores system. SRC is also trading at a solid discount compared to its industry.

Innovative Industrial Properties, Inc. IIPR

Innovative Industrial Properties is a REIT that invests exclusively in property assets that are used for the cultivation and production of cannabis products. The basic idea is that IIPR purchases properties from growers or producers. The company then makes improvements to maximize utility to the operators and execute a leaseback agreement. The producers then continue to operate their businesses while paying rent to IIPR. David Borun, who runs our Zacks Marijuana Innovators, recently put it like this: “IIPR has become the hands-down industry expert in navigating the complex patchwork of state and local regulations pertaining to marijuana facilities.”

IIPR saw its consensus earnings revisions soar after it posted another blowout quarter, which helps it earn a Zacks Rank #1 (Strong Buy) right now. The company’s sales are projected to skyrocket over 135% this year and another 51% next year. This is expected to lift its bottom line by 55% and 43% during this same stretch.

Like most of the market, IIPR stock has been hit hard over the last month. Shares of IIPR fell from over $105 a share to roughly $48 a share. This helps set up what could be a solid longer-term buying opportunity as more states legalize marijuana. Plus, the firm’s $1.00 a share quarterly dividend is up 122% big from the year-ago period’s $0.45 a share. Overall, IIPR is currently yielding roughly 8.40%, to easily beat its industry’s 5.36% average.

Americold Realty Trust COLD

As its name and ticker might suggest, Americold Realty is a REIT that is focused on the operation and development of temperature-controlled warehouses. The firm currently owns and operates roughly 175 warehouses across the U.S., New Zealand, Australia, Canada, and Argentina. The Atlanta, Georgia-based company works mostly with food producers, processors, distributors, and retailers.

COLD shares have fallen amid the selloff, down 20% from $38 a share in February to around $30 per share at the moment. With that said, the stock has jumped back in the last several days from under $24 a share. On March 5, Americold Realty announced a first quarter dividend of $0.21 a share, for an annualized payout of $0.84, which is up 5% from the last dividend. COLD’s yield is the lowest on our list today at about 2.75%. But let’s not forget that this crushesthe 10-year U.S. Treasury’s 1.12% and the S&P 500’s 2.33% average—based on the SPDR S&P 500 ETF Trust SPY.

COLD is currently a Zacks Rank #3 (Hold) and sports a “B” grade for Growth in our Style Scores system. Looking ahead, Americold Realty’s revenue is projected to jump over 11% this year to help lift its bottom-line by 7%. Plus, COLD could play a vital role during the coronavirus pandemic as it helps vital supply chains.

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