Real estate investment trusts, or REITs, offer some of the best investment opportunities, with dividend yields to boot. Real estate stocks also offer you an opportunity to invest in real estate without having to own property.
The best part – oftentimes, you’ll make more money with an REIT than you will with an average stock or bond. And more often than not, REITs have a strong history of outperforming in times of rising and falling interest rates. They’re also recession proof.
In addition, by law, REITs are required to pay out 90% of their taxable income annually in the form of a dividend. That’s another reason they perform so well in any economic environment.
At the same time, it’s important to invest in REITs that have sustainable yields, too. After all, with the current pandemic still wreaking havoc, REITs exposed to retail and restaurants, for example, could come under pressure.
With that in mind, here are three of the top REITs to consider with yields of 5% or more.
- LTC Properties Inc. (NYSE:LTC) with a yield of 6.55%.
- Physicians Realty Trust (NYSE:DOC) with a yield of 5.17%.
- W.P. Carey and Co. (NYSE:WPC) with a yield of 6.2%.
Real Estate Stocks: LTC Properties Inc. (LTC)
LTC Properties isn’t one of the most exciting real estate stocks on the market. After all, the company’s property portfolio is full of skilled nursing and assisted-living facilities that cover about 27 states.
But with a yield of 6.55%, it’s well worth the investment.
Also, while it may sound like a boring idea, health and senior living markets do offer stable and growing demand with aging baby boomers. More than 10,000 boomers are turning 65 every day, and may require far more health services as time goes by. That trend is definitely a positive for LTC Properties and its yield.
Physicians Realty Trust (DOC)
With a yield of 5.17%, Physicians Realty Trust is another top REIT to consider because of its safe, recession proof dividend, and its exposure to medical offices. At the moment, medical offices are some of the most resilient types of commercial real estate to own. In addition, healthcare is an essential service, especially now in the pandemic.
Among real estate stocks, DOC has a strong history of yield growth and revenue growth. In fact, in the second quarter, the company posted revenue of $109 million, up 15% year-over-year, as net income jumped 152% YOY.
“At Physicians Realty Trust, we remain focused on supporting the nation’s healthcare providers through our portfolio of essential outpatient real estate. Our partnership-focused approach to management, alongside our continued emphasis on portfolio quality, leads to resilience in this time of uncertainty,” John T. Thomas, president and CEO of the trust, recently said in a statement.
“Showcasing this resilience, our portfolio achieved 98% collections on contractual rent and common area charges for the second quarter. Each of our assets remains open and operating to meet the needs of healthcare providers and the patients they serve.”
W.P. Carey and Co. (WPC)
With a yield of 6.2%, W.P. Carey and Co. should also be on your list of real estate stocks.
With a widely diversified portfolio, 17% of its assets are in retail, 24% in industrial, 23% in office, 22% in warehouse and 5% in warehouse, according to Motley Fool contributor Reuben Gregg Brewer. In addition, the REIT generates about 36% of its rent from non-U.S. properties.
It’s also looking to invest more in warehouse and industrial assets. In fact, in September 2020, it announced a $44 million sale-leaseback of two food manufacturing facilities. In October, it also announced the sale-leaseback of a 622,000 square-foot manufacturing facility with Weber-Stephen Products LLC, a leader in barbecue grills and accessories.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999.