While real estate investment trusts aren’t the most exciting ideas available, their generally reliable platform makes REIT stocks a compelling avenue for success. That’s especially the case amid the uncertainties clouding the present market cycle.
For one thing, investors gravitate toward REIT stocks because of the underlying passive income. By their legal structure, REITs are required to pay out 90% of their earnings to shareholders in the form of dividends. But it’s not just about the passive income.
Real estate is the king of investment classes, we’ve all heard that. However, laypeople can easily make mistakes in this sector. With REITs, you’re dealing with top experts who carefully assess the properties that make up their portfolio.
To be sure, that doesn’t guarantee anything. However, you’re probably better off buying REIT stocks than venturing into the real estate sector on your own.
Ventas (VTR)
Based in Chicago, Illinois, Ventas (NYSE:VTR) represents one of the REIT stocks that falls under the healthcare facilities category. Per its public profile, the enterprise focuses on senior housing communities. Due to the explosive population spike of the baby boom, this space enjoys a massive total addressable market.
To be sure, Ventas’ earnings performances is extremely hit or miss. For example, in the second quarter of 2023, the company posted earnings per share of 26 cents, beating out the consensus target of 2 cents. However, in Q3, the enterprise incurred a loss of 18 cents per share, falling well below the expected loss of 1 cent. Not surprisingly, VTR has been choppy over the past 52 weeks.
Still, covering experts anticipate that in fiscal 2024, EPS could rise to 6 cents. That’s a big jump from last year’s loss of 10 cents .Not only that, revenue could rise by 7.6% to hit $4.84 billion. Further, fiscal 2025 could see EPS at 32 cents on sales of $5.14 billion. Combined with a forward annual dividend yield of 3.79%, VTR is an enticing candidate for REIT stocks.
Park Hotels & Resorts (PK)
Headquartered in Tysons, Virginia, Park Hotels & Resorts (NYSE:PK) falls under (obviously) the lodgings category. Per its corporate profile, Park represents one of the largest publicly traded REITs focused on diverse hotels and resorts. Right now, its portfolio consists of 43 premium-branded lodging institutions. With consumers prioritizing travel despite the ravages of inflation, PK could be attractive speculation.
As with other REIT stocks, Park’s earnings print can run all over the map. For example, in Q2 2023, the company posted a loss per share of 70 cents, well below the expected EPS of 28 cents. However, in the subsequent three quarters, the REIT’s average positive earnings surprise clocked in at 181.67%. That’s an impressive turnaround.
In fiscal 2024, analysts anticipate that the bottom line could expand by nearly 78% to hit earnings of 80 cents per share. On the top line, revenue could reach $2.67 billion. For fiscal 2025, EPS could improve to 93 cents while revenue could increase by 3% to ping $2.75 billion. Park also pays a forward dividend yield of 6.23%, again making it an attractive idea.
Innovative Industrial Properties (IIPR)
Hailing from Park City, Utah, Innovative Industrial Properties (NYSE:IIPR) falls under the industrial component of REIT stocks. According to its corporate profile, Innovative focuses on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed cannabis operators. Thanks to the Biden administration’s proposal to reschedule marijuana to a lower enforcement category, IIPR could become very interesting.
For full disclosure, analysts don’t quite see it that way. Presently, IIPR stock carries a consensus hold rating. Generally, the enterprise is financially consistent regarding its earnings print, though it missed in Q1 2024. As a result, the REIT’s average positive earnings surprise landed at only 0.73% in the past four quarters.
Because of the lack of conviction, IIPR is a bit iffy and therefore speculative. Fiscal 2024 EPS calls for $5.31, which is down 8% year-over-year. However, fiscal 2025 could see earnings rise to $5.85 per share. Also, revenue may bump up to $325.98 million, implying 4.4% growth from projected 2024 sales of $312.1 million.
Innovative offers a forward dividend yield of 6.66%, which should help spice up the narrative.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
