If you’re retiring, retired, or just thinking about retiring, it’s never too late to protect your portfolio with undervalued retirement stocks – especially those with dividends.
Look at PepsiCo (NASDAQ:PEP), for example. Over the last few weeks, the snack and beverage stock gapped from about $182 to a recent low of $169.52. All on news of a food-safety recall with Quaker products, which seems to be a temporary issue. PEP expects recall costs to moderate as the year goes on.
In the meantime, as we wait for the temporary weakness to subside, we can collect the current PEP yield of about 3.12% at the moment.
We can even take advantage of the weakness in undervalued retirement stocks, like American States Water (NYSE:AWR), which yields about 2.36% at the moment. With a 70-year history of dividend payouts, it’s still a strong Dividend King that will bounce back as it historically has.
While those two are certainly worth buying, here are three other undervalued retirement stocks you may want to buy and hold today.
Innovative Industrial Properties (IIPR)
One of the hottest topics of the year has been cannabis, and more states may approve its use. Over 88% of Americans want to see it legalized. It’s also being rescheduled. Plus, as we near the U.S. election in November, there’s growing speculation we could hear more about the potential for legalization. After all, when 88% of the public says it wants something, you pay attention.
One of the best ways to profit from the potential is with a real estate investment trust (REIT), such as Innovative Industrial Properties (NYSE:IIPR). The company focuses on acquisition, and management of state-licensed cannabis operators. It owns 108 properties across 19 states with 8.9 million rentable square feet.
Better, IIPR carries a current yield of 6.65%. So, not only can we collect that yield, we can make money from appreciation as the cannabis story heats up.
Digital Realty Trust (DLR)
At just $147.31, Digital Realty Trust (NYSE:DLR) still has massive upside potential.
All thanks to demand for its data centers, driven by unstoppable demand for artificial intelligence (AI). Plus, its yield of 3.31% is tough to overlook, too. In May, DLR declared a quarterly dividend of $1.22, payable June 28 to shareholders of record as of June 14.
Also remember, according to Goldman Sachs, data center demand is expected to rise at a 15% CAGR until 2030. Jones Lang LaSalle CEO, Christian Ulbrich, says there’s soaring demand for data centers with AI.
RBC Capital analysts raised its price target on Digital Realty to $160 from $144, rating the shares as outperform. Deutsche Bank also raised its price target to $145 from $143, with a hold rating. Even Evercore ISI adjusted its target on Digital Realty to $160 from $154, with an outperform rating.
Evercore ISI added that, “Q1 marked ‘a solid start to the year’ for data center REITs as bookings performance and pricing are reflective of strong fundamentals amid AI tailwinds driving higher demand, while supply remains tight,” as quoted by TheFly.com.
STAG Industrial (STAG)
Next up is STAG Industrial (NYSE:STAG), which yields 4.26%.
It also just declared a monthly dividend of $0.1233, payable June 17 to shareholders of record as of May 31. It’s also payable on July 15 to shareholders of record as of June 28.
The REIT – which leases industrial properties, such as warehouses and distribution centers to e-commerce companies – is also benefiting from consumers shifting to online shopping.
“Current projections estimate that by 2025, online shopping could represent one-quarter of all retail transactions,” says MidMichiganNow.com. “This shift is primarily driven by the convenience of shopping from home, which offers consumers the ability to browse and purchase without the need to travel, endure potential crowds, or face the disappointment of out-of-stock items.” As long as that trend continues, REITs like STAG should benefit.
In addition, the REIT just posted funds from operations of 59 cents, which beat estimates by a penny. Revenue of $187.54 million, up 8.1% year over year, beating expectations by $3.23 million. Net operating income of $145.5 million jumped nearly 10% year over year.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
