Some investors like penny stocks. Some investors like high dividend yields. Investors who like both should consider low-priced real estate investment trusts (REITs). These are real-estate firms that own, operate or fund properties that produce income. They also invest in most types of real estate properties, such as apartment buildings, hotels, offices, warehouses and more.
Shares of REITs are publicly traded. This means that they have a lot of liquidity, making it easy to buy and sell them. This isn’t the case with the actual properties, so investing in REITs is a viable option for investors who would like to invest in real estate but that don’t want the problems associated with owning the actual properties themselves.
Most REIT investors are primarily seeking income, or high dividend yields. They typically aren’t seeking price appreciation like other investors. This is because growth companies generally don’t pay dividends like REITs do. Instead, they use their cash to invest back into the company and make it grow. But, as you’ll soon find out, some of these small REITs are also capable of offering investors substantial price appreciation.
So, here are seven penny stock REITS to consider:
- Sachem Capital (NYSEAMERICAN:SACH)
- Western Asset Mortgage Capital (NYSE:WMC)
- Lument Finance Trust (NYSE:LFT)
- New York Mortgage Trust (NASDAQ:NYMT)
- Invesco Mortgage Capital (NYSE:IVR)
- Presidio Property Trust (NASDAQ:SQFT)
- AG Mortgage Investment Trust (NYSE:MITT)
Penny Stock REITs to Buy: Sachem Capital (SACH)
Sachem Capital is involved in the “originating, underwriting, funding, servicing, and managing of a portfolio of short-term loans.”
More specifically, Sachem offers loans to real-estate investors which fund the acquisitions and development of commercial or residential properties across the east coast, from Connecticut (where the company is based), Massachusetts and other northern states to places like Florida.
Recently, shares of SACH stock have been strong. Over the past year, they have risen from about $1.50 a share to over $5. But even with this appreciation, the REIT still pays a nice dividend. The annual payment of 48 cents works out to be a yield of 9.38%.
According to StreetInsider.com, Wall Street investment bank Ladenburg Thalmann currently has a buy rating on this pick of the penny stocks.
Western Asset Mortgage Capital (WMC)
Next on this list of penny stocks is Western Asset Mortgage Capital, a company based in Pasadena, California. The REIT acquires, finances and manages asset-backed securities investments and several different kinds of loans. It also manages a portfolio of commercial and residential mortgage-backed securities as well other assets.
After a small rally a few months ago, shares of WMC stock have been consolidating, or trading sideways. This is right in the middle of the recent rage. Over the past year, WMC shares have traded as low as $1.37 and as high as $4.46.
What’s more, Blackrock (NYSE:BLK) and Vanguard are the largest holders of Western Mortgage. Together, they hold almost 15% of the shares.
Finally, as far as income goes, Western Asset Mortgage Capital now pays an annual dividend of 11 cents per share. At the current price, this works out to be a dividend yield of about 3.24%.
Lument Finance Trust (LFT)
Lument Finance Trust is a REIT that invests in, finances and manages a portfolio of commercial real-estate debt investments in the United States. The company used to be called Hunt Companies Finance Trust. However, it changed its name in December 2020 — and also announced a dividend increase.
Since November, the price of LFT stock shares has climbed from about $2.80 to current levels around $3.53. The current market capitalization is about $88 million. However, even with its recent rally, Lument still pays a nice dividend. The annual payment of 36 cents works out to be a yield of over 10%.
According to The Wall Street Journal, one analyst following LFT stock has it rated as a hold while two analysts have it as a buy. But their average target price is $4.25 a share. That’s about 19% above where the shares are currently trading. Presumably, this means there’s still upside in store for this pick of the penny stocks.
New York Mortgage Trust (NYMT)
New York Mortgage Trust buys, finances and manages mortgage-related single-family and multi-family residential properties in the United States. The company makes investments in residential loans, mortgages and other types of loans and multifamily properties.
Over the past year, shareholders of this company have had a lot to be happy about. Last April, NYMT stock traded around $1. Since then, though, the shares have more than quadrupled in value. Right now, NYMT trades at $4.61 a share.
But even with this appreciation, the stock still has a very attractive dividend. With an annual payout of 33 cents per share, this stock has a dividend yield of about 7%.
According to The Wall Street Journal, New York Mortgage has five analysts rating it as a hold and three analysts rating it as a buy. However, with an average target price of $4.50, they believe this one of the penny stocks is already fairly valued at current prices.
Invesco Mortgage Capital (IVR)
Based in Atlanta, Georgia, Invesco Mortgage Capital is a REIT that focuses on investing in and managing mortgage-backed securities and other mortgage-related assets — from residential mortgage-backed securities (RMBS) to commercial mortgage-backed securities (CMBS).
As REITs and penny stocks go, this is a relatively large company. Right now, IVR stock has a market cap of about $915 million. Despite this, though, the stock is not followed very closely by research firms on Wall Street.
Over the past six months, shares of this REIT have basically been range bound. However, shareholders have still been rewarded with a nice dividend. At 32 cents per share, its yield works out to be around 8%.
Presidio Property Trust (SQFT)
Next up on this list of penny stocks, Presidio buys, owns and operates a geographically diversified portfolio of real estate assets, including office, industrial, retail and model-home residential properties. These properties are leased to builders located throughout the United States.
This REIT pays an annual dividend of 40 cents a share. At the current price level, this works out to be a yield of about 10.41%.
All told, though, Presidio is a small company. Currently, its market capitalization is just about $37 million.
As such, the company isn’t followed closely by Wall Street. But some investors believe this is a good thing. If (or when) Wall Street starts to it cover the stock, it could bring new buyers into the market and push the share price higher than the current price of around $3.86.
AG Mortgage Investment Trust (MITT)
AG Mortgage Investment Trust is company that invests in a wide variety of real-estate-related securities. Its portfolio consists of credit investments and residential mortgage-backed securities. It also includes residential and commercial properties, loans and land-related financing as well as other types of sophisticated assets and loans that are related to real estate.
Since the beginning of the year, shares of this one of the penny stocks have moved higher sharply. Right now, MITT stock has a price of about $4.33. Currently, the stock also pays an annual dividend of 12 cents a share, making for a yield of about 2.7%.
According to The Wall Street Journal, two analysts have this name as a sell while one analyst has it as a hold. As such, all of them would probably say there are better REITs out there than this one. Still, position or not, it doesn’t hurt to keep MITT on your radar.
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On the date of publication, Mark Putrino did not have any positions (either directly or indirectly) in any of the aforementioned securities.