Real estate investment trusts have been on a roll for a while now. It might be that the last time you heard from the REITs was when shopping malls were emptying out due to e-commerce competition and everyone was writing an epitaph for mall REITs.
But those days are gone. And there are far more types of REITs than shopping mall owners (although some of the good ones have recovered well). In this low interest rate environment, REITs are in their prime. They can refinance debt on properties they currently own and save money, and they can also buy properties at lower total costs.
Also, because of the way REITs are structured, they pay shareholders a cut of their net profit in the form of dividends, so you get a solid income stream. Income should actually be high on the priority list for any growth investor, and I explain why in this free investor briefing.
Also, most of these businesses are U.S.-focused, so external trade problems aren’t an issue to growth. But you can’t just buy any REITs. Quality is important. And, as the shopping mall scenario showed, so are strategic sectors.
Below, my seven top-notch REITs to buy for income are great choices for the long term.
EastGroup Properties (EGP)
Dividend Yield: 2.3%
EastGroup Properties (NYSE:EGP) focuses on industrial properties around the U.S. It currently owns distribution facilities in Florida, California, Texas, Arizona and North Carolina.
If you notice, most of those states have the largest ports in the U.S. and others have distribution hubs for e-commerce. And some have both. The point is, EGP is well positioned to take advantage of the true fuel of the U.S. economy, the U.S. consumer.
And this is a very good time to be on this end of the market, as the U.S. economy continues to chug along and rates are likely headed lower.
EGP stock is up 36% in the past 12 months and delivers a solid 2.3% dividend at current levels.
Agree Realty (ADC)
Dividend Yield: 2.9%
Agree Realty (NYSE:ADC) is a REIT that buys, develops and manages properties for large national retailers outside the mall environment.
Its clients include The TJX Companies’ (NYSE:TJX) T.J. Maxx, Wawa, Hobby Lobby, Home Depot (NYSE:HD), Tractor Supply (NASDAQ:TSCO), Walgreen’s (NASDAQ:WBA) and Best Buy (NYSE:BBY). These are high-quality clients with great credit quality, so the risk of default is minimal.
Also, ADC operates as a net lease REIT, meaning the client pays all expenses related to property management, taxes and maintenance. This an even better deal for ADC, since it doesn’t have to spend money on any of those issues. When you have an income play where the yield is backed up by a solid business model, that’s a recipe for what I sometimes call Bulletproof Stocks.
ADC stock is up 43% in the past year and still delivers a nearly 3% dividend.
Spirit Realty Capital (SRC)
Dividend Yield: 5.1%
Spirit Realty Capital (NYSE:SRC) is also a net lease REIT that has 255 tenants in over 1,600 properties. These properties span 48 states and their tenants represent 32 major industries.
Its top five tenants are: Church’s Chicken, Walgreen’s, Home Depot, Circle K and CVS (NYSE:CVS).
What’s more, SRC’s tenants are signed into long-term leases of 10-20 years, and their client base is full of quality companies that aren’t going to be shifting their strategy quickly over time.
SRC stock is up 24% in the past year, and it continues to deliver a generous 5.1% dividend. What’s more, it’s pretty fairly valued, even after its recent strong performance.
Prologis (PLD)
Dividend Yield: 2.3%
Prologis (NYSE:PLD) is all about logistics. And if there’s anything that drives the U.S. economy and the U.S. consumer at this point, it’s next-generation logistical support.
And while that word might not inspire a great deal of excitement, logistics are the backbone of the e-commerce industry — the movement of goods from around the world to your home or office.
It’s a very big deal. And PLD is one of the biggest players. Currently it has nearly 800 million square feet of storage properties with 5,000 customers in 19 countries.
Remember, moving goods from point A to B means having properties at point A and point B for greater efficiencies. This does expose PLD to the global economic slowdown, but its diversification means it can exploit areas of opportunity within its locations.
And so far, it has worked — the stock is up nearly 44% in the past 12 months and it comes with a solid 2.3% dividend. What’s more, its trailing price-to-earnings ratio is still only 33, so it’s not overvalued. That being said, beyond the P/E, there’s a few other things you should be looking for in your stocks now.
Extra Space Storage (EXR)
Dividend Yield: 3.1%
Extra Space Storage (NYSE:EXR) is a self-storage operation that has been around since 1977. It now carries a respectable $15 billion market capitalization and has operations in 38 states.
To be more specific, it has 103 million square feet of available space across 910,000 units in 1,400 stores.
It also offers reinsurance to EXR tenants for any losses in its stores. That insurance business is a solid way to build cash flow and build up a nice store of investment monies.
Since 2008, people have begun moving around the country for opportunities, especially millennials. On the other end of the demographic spectrum, baby boomers are starting to downsize. Both are great trends for the storage business.
Up 34% in the past year, EXR stock also sports a solid 3.1% dividend.
Vereit (VER)
Dividend Yield: 5.6%
Vereit (NYSE:VER) is another net lease REIT that focuses on high-quality tenants that are interested in long-term leases.
It currently has around 4,000 properties in 49 states and Puerto Rico, with about 90 million square feet of space.
Its top 10 tenant concentration makes up about 27% of its portfolio and includes the likes of Golden Gate Capital’s Red Lobster, Family Dollar, Walgreen’s, Dollar General (NYSE:DG) and CVS.
Casual dining and quick-service restaurants make up about 20% of its portfolio. As long as the consumer stays strong, this is a good choice, since the dining segment will stay strong. At Growth Investor, we are very much focused on the consumer trend in our economy, and you should be, too.
VER stock delivers a very generous 5.6% dividend and that’s after a 35% run in the past year.
Kimco Realty (KIM)
Dividend Yield: 5.3%
Kimco Realty (NYSE:KIM) specializes in open-air shopping malls in the top metropolitan markets.
Currently, it has over 420 shopping centers with 75 million square feet of leasable space. This is the new trend in brick-and-mortar shopping. It’s all about one or two anchor stores with a lot of parking and then satellite stores off of them. Its focus is on strong retail locations with plenty of consumer demand.
It has been around for nearly 60 years, so it knows how to deal with the dynamics of the U.S. retail space. And Kimco has mastered these retail dynamics through being a full-service REIT that manages and maintains the properties, unlike net lease REITs.
KIM stock is up 42% in the past year yet it still produces a nearly 5.3% dividend yield. And its trailing P/E is only 26, which is pretty low for the top stocks in this sector.
Why Dividend Growth Stocks Are So Important Now
These days, the global bond market is just going haywire: We’ve got falling and even negative yields overseas. But as investors retreat to U.S. Treasurys it’s causing bizarre effects here, too. Just look at what happened this summer, when the two-year Treasury actually began to yield MORE than the 10-year Treasury.
And even the 30-year Treasury can’t be relied upon for good yield anymore. In August, its yield dropped below 2% for the first time ever.
So — whether you’re managing big institutional cash, or your own portfolio — you’ll also want to look at the group I sometimes call the Money Magnets.
Not only did these stocks earn an “A” in my Portfolio Grader tool, thanks to strong buying pressure and great fundamentals …
The stocks also earn an “A” in my Dividend Grader tool. These stocks are able to pay great yields — and have the strong business model to back it up.
All in all, I’ve got 27 strong dividend growth stocks for you now, and one more coming, in Growth Investor … almost all of which yield more than the S&P 500. These stocks are poised to do well as we continue to see international capital flow to the U.S. markets. Click here to see how I found these stocks, and how you can get great performance out of YOUR portfolio — come what may.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.