Real estate investment trusts (REITs) can be a great way for investors to earn a steady income. It’s important to diversify your portfolio. With the current market developments, it’s essential to know which REITs to buy now. I have chosen three stocks for their growth potential, reliable dividends and solid fundamentals. Focusing on REITs with these attributes can help your portfolio with stable dividends.
I will cover a range of REITs from mobile-home parks and wireless communications to industrial properties. Whether you are looking for dividends or long-term growth potential, these REITs will fit the bill. It’s important for investors to understand the strength and fundamentals of these REITs, as this knowledge will help in making informed decisions based on your strategic needs. Dive into the following REITs to see why they stand out and could be a good fit for your portfolio.
Sun Communities (SUI)
Sun Communities (NYSE:SUI) is a mobile home (MH) park REIT. SUI is the largest publicly traded operator of MH, RV and marina properties. SUI has about 18,200 MH and RV operation sites, along with approximately 48,000 wet slips and dry storage spaces.
SUI’s full-year core funds from operations (FFO) per share guidance for 2024 was stated at $7.06 to $7.22. For investors looking for dividends, SUI’s current dividend yield is at 3.04% and the payout has been increasing each year. The Q1 increase brought the dividend to 94 cents per quarter, which is $3.76 annually.
In the Q1 2024 update, SUI slightly boosted its yearly estimated total real property NOI from 6.3% to 7.3% to 6.5% to 7.3%. SUI has historically had great growth in NOI, so this is a positive.
It is good to see companies managing expenses effectively. SUI made this a key part of the strategy which was stated on the Q1 2024 earnings transcript:
Sun reported core FFO per diluted share of $1.19, driven by strong real property revenue growth and our continued focus on managing expenses. In North America, total same-property NOI for the quarter grew 7.9%, driven by a 6% increase in revenues and a 2.2% increase in expenses, further detailing each segment.
SBA Communications (SBAC)
SBA Communications (NASDAQ:SBAC) provides and operates wireless communications infrastructure throughout the Americas, Africa and Asia. SBAC is a tower REIT. I believe SBAC is a good REIT to buy at current prices.
In the Q1 earnings report full-year adjusted FFO (AFFO) guidance was down slightly to $13.09 to $13.46 per share, a 5 cents per share decline. At a glance, this may be concerning for potential investors despite a generally positive quarter. The primary reason for the drop in AFFO, as management explained on the earnings call:
Due to the current strength of the U.S. dollars versus local currency in some of our international markets our overall outlook for site leasing revenue, total revenues, Tower cash flow, and adjusted EBITDA are slightly down versus our initial guidance.
While exchange rates pose a challenge, this doesn’t indicate any fundamental weakness in the company. Moreover, adjusting for currency exchange rates, the new guidance was a penny per share higher than previously.
Another positive note is SBAC buying back shares during Q1. SBAC spent $200 million to repurchase 900,000 shares. This suggests that SBAC believes its shares are undervalued. If management believes shares are trading at a significant discount, buying back shares can be a good option.
Rexford Industrial Realty (REXR)
Rexford Industrial Realty (NYSE:REXR) is an industrial REIT focused on Southern California. REXR tenants are primarily from the warehousing/transportation, wholesale trade and manufacturing sectors, which together comprise 67% of its tenant base. I like industrial real estate in Southern California like REXR owns because I expect market rents to increase significantly over the next decade.
REXR increased its full-year 2024 guidance. It raisedcCore FFO per diluted share from $2.27 to $2.30 to $2.31 to $2.34. GAAP same-property net operating income (NOI) growth guidance was also increased from 4% to 5% to 4.25% to 5.25%. REXR reiterated cash same-property NOI growth guidance at 7% to 8%.
REXR’s net interest expense increased due to the purchase of the Blackstone (NYSE:BX) portfolio, which it financed by issuing new bonds. The total cost was approximately $1 billion. The commercial real estate market is weak. REXR making more acquisitions in the next few quarters would not be surprising.
On the date of publication, Michael VanLoon is LONG SLRC. The opinions expressed in this article are those of the writer, not subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
