Many investors find it beneficial to include real estate investment trusts, or REITs, in their portfolios. These companies bring a suite of advantages that can’t be overlooked. To start with, they offer a sound way to buy exposure to real property, landholdings, without actually buying real estate. REITs are also known as champion dividend payers, as they’re required to distribute up to 90% of their taxable income to shareholders – and dividends make a convenient mode of compliance.
For Wedbush analyst Richard Anderson, these basic facts about REITs make them indispensable. But some quirks of current conditions make them even better, in his view.
First, a number of REITs have been underperforming recently, offering investors low-cost entry points. And second, while the Federal Reserve has hinted that it will hold rates at high levels for longer, it has also indicated that the current round of rate-tightening is behind us now – and Anderson points out that US REITs tend to outperform after a round of higher interest rates. The combination of higher rates in a more stable environment is beneficial for these stocks.
Anderson doesn’t leave us with a macro view of the industry. The analyst delves into the micro level, selecting two REIT stocks, both of which are high-yield dividend payers, offering a dividend return of up to 8%. We ran them through the TipRanks database to see what makes them stand out.
Healthcare Realty Trust (HR)
The first high-yield dividend payer we’ll look at is Healthcare Realty Trust, a real estate investment trust that specializes in, you guessed it, medical office space. The company’s portfolio makeup makes it clear that HR is the leader in the medical office building REIT niche. The company owns 714 properties across 35 states, totaling almost 42 million square feet of usable, leasable space.
HR has focused its efforts on major urban areas, with properties in the fast-growing metro area of Dallas, Texas, making up 9.7% of the medical office building portfolio, or 3.308 million square feet. Other metros where Healthcare Realty…
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