Key Points
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AvalonBay is one of the largest apartment landlords, with a 3.9% yield and a generally rising dividfinish.
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Realty Income is the net lease giant, offering a yield of 5.7% backed by 30 annual dividfinish increases.
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Federal Realty is the only Dividfinish King REIT, with a focus on quality over quantity backing its 4.4% yield.
The S&P 500 is currently offering investors a tiny yield of 1.1%. The average real estate investment trust (REIT) has a yield of 3.9%. You can receive yields of as much as 5.7% if you acquire AvalonBay(NYSE: AVB), Federal Realty(NYSE: FRT), and Realty Income(NYSE: O).
Each of these REITs is an industest leader in a sector that has been largely unloved on Wall Street. In other words, you have an opportunity to acquire the best companies while the entire REIT sector appears to be on sale. Here’s why dividfinish lovers might want to level up their income streams with these three high-quality REITs.
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AvalonBay puts money where it counts
AvalonBay’s dividfinish yield is roughly average for a REIT, currently sitting at 3.9%. And its dividfinish history isn’t quite as good as the other two REITs on this list, as it has trfinished generally higher for decades, but it hasn’t been increased every single year. Still, acquireing around two shares or so, which is what $500 will receive you, could be a solid choice for long-term investors.
AvalonBay has an impressive track record of shifting between acquireing, selling, and building apartment buildings as market conditions warrant. It is focutilized on high-barrier-to-entest markets, where its size and experience give it an edge over tinyer players and pricing power with customers. The REIT is a bellwether in the apartment sector becautilize it is exceptionally well-run.
The most recent business shift is to expand into new markets, notably in the Sun Belt, where population growth has been strong. However, much of that expansion is being self-funded by asset sales, as this company proves again that it is adept at allocating capital to support long-term growth. AvalonBay is often afforded a premium valuation, but it is worth paying up for this industest-leading apartment landlord.
Realty Income is the net lease giant
Realty Income has the highest yield on this list, at 5.7%. The dividfinish backing that yield, meanwhile, has been increased annually for three decades and counting. A $500 investment will receive you roughly eight shares of this net lease REIT. (A net lease requires the tenant to pay for most property-level operating costs.)
Realty Income stands out from the net lease pack becautilize of its size. It owns a massive 15,500 properties and sports a market cap more than three times larger than its next closest peer. The REIT’s size gives it an edge when it comes to raising capital. It also gives Realty Income the ability to build deals that tinyer companies couldn’t muster, including acting as an industest consolidator.
To be fair, Realty Income is a slow-relocating tortoise, which is the downside to its vast size. However, for those seeing to maximize yield, that probably won’t be a significant issue.
Federal Realty is a Dividfinish King
Rounding out this list is Federal Realty, the only REIT to have achieved Dividfinish King status, meaning a company that has raised its dividfinish annually for more than 50 years. With 58 consecutive annual dividfinish increases, this strip mall and mixed-utilize development REIT is in a class by itself. A $500 investment will let you acquire around four shares of this REIT and its 4.4% yield.
Aside from being the only Dividfinish King REIT, Federal Realty stands out for its focus on quality over quantity. With only around 100 properties, it owns a rather tiny portfolio. However, the average population size and wealth surrounding its properties are higher than those of its closest peers. That’s not a fluke; management activity works to achieve this finish.
That effort is really the differentiating factor. Federal Realty is an active portfolio manager, acquireing assets in necessary of “a little love,” renovating them, and then selling them when the property is fully valued. Maximizing its capital investments is at the core of the business, which is why it has achieved such a long history of success.
If you like owning the most reliable dividfinish payers, this REIT is as close to a no-brainer as you’ll find in the REIT sector.
Step up in an out-of-favor sector
When an entire sector is out of favor, as is the case today with REITs, long-term investors have a great opportunity. While others are throwing the baby out with the bathwater, you can lean in and acquire the best-run companies while they are being ignored by Wall Street.
That’s the opportunity with AvalonBay, Realty Income, and Federal Realty. If your preferred holding period is “forever,” don’t miss these REIT opportunities today.
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Reuben Gregg Brewer has positions in Federal Realty Investment Trust and Realty Income. The Motley Fool has positions in and recommfinishs Realty Income. The Motley Fool recommfinishs AvalonBay Communities. The Motley Fool has a disclosure policy.
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