Yahoo Finance 7 REITs to Buy for Regular Income
A good source for dividends.
After the 2008 financial crisis, many investors began to view real estate with a critical eye. But a lot has changed and prices and related stocks have risen, with some passing former highs. Meanwhile, real estate's reliable dividend checks continue to be a big opportunity. After all, if you're collecting regular rent payments, it's easy to pass on regular profits to shareholders. That's how many real estate investment trusts, or REITs, have come into favor. Since REITs are required to pass on 90 percent of taxable income to shareholders, this means a mandate for substantial dividends. Here are seven to consider.
Sun Communities (ticker: SUI)
Sun Communities operates more than 300 manufactured housing and RV communities around the U.S. One look at this company's website and you'll see that the derisive term "trailer parks" certainly doesn't describe these properties, which come with amenities like gyms, pools and playgrounds. SUI has been red hot, roughly doubling since the end of 2013 while the broader stock market has increased about 50 percent in the same period. But with a robust and reliable dividend on top of those returns, this unique play on housing has a lot more to offer than a typical blue-chip dividend stock.
Current yield: 3.1 percent
Independence Realty Trust, Inc. (IRT)
Apartment owner and operator IRT has a portfolio of about 50 properties mainly in the eastern half of the U.S., in attractive locations including Austin, Texas; Tampa, Florida, and Indianapolis. In the greater scheme of REITs, Independence isn't the biggest at around $800 million in current market value. However, with a projected 14 percent growth in revenue this fiscal year, it is an attractive smaller play on residential real estate -- and perhaps a buyout target. Even if it's not acquired, however, it offers a generous dividend that should make buying and holding worthwhile for many years to come.
Current yield: 7.6 percent
Arbor Realty Trust (ABR)
Arbor Realty Trust is classified as a REIT, but doesn't have much physical real estate. This stock specializes in real estate-related loans and investments, including mortgage-related securities. Its assets are financial, but the structure is the same: The company collects regular interest payments or profit-sharing from its investments. Simply think of ABR as the reverse of your home mortgage arrangement, where every month checks are mailed to you. Those checks are substantial, too, meaning a steady flow of dividends that is more than three times the typical dividend stock on Wall Street.
Current yield: 9.4 percent
Realty Income Corp. (O)
Realty Income doesn't just offer a generous yield -- it offers a reliable one, too. The combination of regular payouts and consistent performance from this shopping center operator is where the real profit potential lies. The stock has consistently paid out more than twice the dividends of the typical Standard & Poor's 500 index component. Realty Income has been soft lately, hitting a two-year low in early February, but shares have stabilized and long-term investors may want to consider the pullback as a buying opportunity.
Current yield: 5.2 percent
Senior Housing Properties Trust (SNH)
Another twist on REIT investing is to focus on one of the few sure things in life: growing old, and requiring a bit more help as we age. Senior Housing Properties Trust operates an array of housing that caters to older Americans, including 55-plus retirement communities for active seniors and full-service assisted-living facilities. It also owns medical office and lab space. The demographic pressures of an aging baby boomer population mean reliable demand for SNH housing and services, and fuel for reliable dividends.
Current yield: 10.3 percent
Extra Space Storage (EXR)
This public storage operator is the second-largest in the U.S., renting facilities of all sizes to stash keepsakes, big boats and recreational vehicles. This pick may not sound like much of a growth business, but believe it or not, it is seeing reliable improvement. Specifically, revenue is set to grow 7 percent this fiscal year and another 11 percent next year. This combination of growth and reliable income is a great one-two punch for long-term dividend investors.
Current yield: 3.7 percent
Hospitality Properties Trust (HPT)
Instead of a play on the monthly payments from apartment tenants, Hospitality Trust gives investors a chance to share in the regular hotel bills from family vacations and business trips. With more than 300 properties that collectively boast some 50,000 rooms across the U.S. and Canada, HPT is a great way to broadly play robust consumer spending and business sentiment in 2018. After all, it's easier to plan that weekend getaway or justify a trip to meet out-of-state clients when the economy is doing well.
Current yield: 8.3 percent
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