3 REITs for Dividend Investors to Buy with Stock Market at New Highs

U.S. stocks continue to climb in November, with the Dow, S&P 500, and Nasdaq all right at brand new highs. The positivity comes on the back of better-than-expected quarterly earnings results, a third Fed interest rate cut, and solid U.S. jobs data. There have also been signs of U.S.-China trade war progress.

On top of that, yields on 10-year U.S. Treasury notes have climbed over the last two months, which helps show that investors’ recession fears have cooled. Still, amid all of these signs of strength, investors should try to add new sources of income to their portfolios.

And Real Estate Investment Trusts are a great place to look. REITs are companies that own, operate, or finance real estate properties that produce income, such as apartment complexes or retail locations. These companies are heavily regulated and must meet a number of qualifications to be classified as a REIT.

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. Meanwhile, one distinct advantage is that REITs must pay at least 90% of their taxable income in dividends to shareholders. Clearly, this means REITs are great options for income investors.

So here are three highly-ranked REITs we found using our Zacks Stock Screener that dividend investors might want to buy with stock indexes at new highs…

Agree Realty Corporation ADC

Agree Realty is a REIT that operates in the net lease retail space. The firm’s portfolio includes roughly 800 assets across nearly all 50 U.S. states, with a ton of big-name clients. In fact, the firm’s top tenants include Walmart WMT, TJX Companies TJX, Walgreens WBA, CVS CVS, Lowe’s LOW, Home Depot HD, and many other retail powers. The firm saw its adjusted Q3 FFO jump 7% in late October, while its quarterly revenue surged 41%.

The Bloomfield Hills, Michigan-based firm currently pays an annualized dividend of $2.28 per share, for a 3.1% yield, which easily tops the 10-year U.S. Treasury’s 1.8%. And this yield isn’t artificially inflated, with ADC shares are up 30% in the past 12 months and 74% in the last three years to crush its industry’s average sideways movement. Agree Realty’s longer-term FFO revisions have moved completely upward recently to help it hold a Zacks Rank #2 (Buy), along with a “B” grade for Momentum in our Style Scores system.  

Looking ahead, our current Zacks Consensus Estimates call for the firm’s fiscal 2019 revenue to surge over 25%, with 2020 projected to come in 21% higher at $224.52 million. Meanwhile, its bottom lines are projected to jump 7% and 8.5%, respectively over the next two years.

United Dominion Realty Trust, Inc. UDR

Unlike ADC, United Dominion operates in the multifamily real estate business throughout what it calls “some of the most desirable locations across the country.” In short, the firm offers luxury apartments in cities such as Los Angles, Denver, Seattle, New York, Dallas, and many more. At the end of the third quarter, which it reported on October 29, United Dominion owned or had an ownership position in over 52,000 apartment homes.

United Dominion stock has surged 19% over the last year and currently sits just off its highs of roughly $50 per share. UDR currently pays an annualized dividend of $1.37 per share, with a yield of 2.87%. The firm is also part of our REIT and Equity Trust – Residential industry, which sits in the top 19% of our more than 250 Zacks industries.

UDR is a Zacks Ranks #2 (Buy) at the moment and its Q4 sales are projected to jump 10.4% to help lift its adjusted FFO by 6%. The company’s full-year fiscal 2019 revenue is projected to pop roughly 8%, with 2020 expected to come in 7% higher at $1.20 billion. Meanwhile, the company’s bottom line is expected to pop 6% in both 2019 and 2020.

Prologis, Inc. PLD

Prologis is a logistics-focused REIT that leases distribution facilities mostly to retail/online fulfillment and business-to-business clients. The firm operates in growth markets in what it calls “high-barrier, high-growth markets” throughout 19 countries to more than 5,000 customers. And Prologis posted stronger-than-projected Q3 FFO in the middle of October.  

The San Francisco, California-based company also announced at the end of last month that it entered into a definitive merger agreement with Liberty Property Trust LPT that will help it expand in target markets including Chicago, Houston, and Southern California. PLD stock is up 52% in 2019 and nearly 90% in the last three years, to outpace its industry’s 20% average climb.

Peeking ahead, Prologis full-year sales are projected to jump 19%, with 2020 expected to come in 13% higher at $3.21 billion. The company’s FFO is expected to climb 9.3% in FY19 and 9% in 2020. Plus, PLD has received a ton of positive longer-term bottom line estimate revisions since it posted its Q3 results, which helps it earn a Zacks Rank #2 (Buy). In the end, Prologis operates in a vital growth market in the Amazon AMZN era. And Prologis holds a dividend yield of 2.41% right now.

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
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Lowe's Companies, Inc. (LOW): Free Stock Analysis Report
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The TJX Companies, Inc. (TJX): Free Stock Analysis Report
CVS Health Corporation (CVS): Free Stock Analysis Report
Walgreens Boots Alliance, Inc. (WBA): Free Stock Analysis Report
Agree Realty Corporation (ADC): Free Stock Analysis Report
United Dominion Realty Trust, Inc. (UDR): Free Stock Analysis Report
Prologis, Inc. (PLD): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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