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3 Buy-Ranked REITs to Help Investors Add Income to Their Portfolios

Benjamin Rains

U.S. stocks fell on Tuesday amid worries about the spread of a potentially deadly virus that began in central China. Despite the downturn, the Dow, S&P 500, and Nasdaq have all counited to climb in 2020. Looking ahead, economists are calling for expansion in 2020, bolstered by the phase-one trade deal, low interest rates, an expected return to earnings growth, and more.

Even with all the signs of strength, investors should still think about adding some income to their portfolios in the form of divided-paying stocks. And a good place to start is the Real Estate Investment Trusts market.

REITs are companies that own, operate, or finance real estate properties that produce income, such as apartment complexes or retail locations. These companies are heavily regulated and must meet a number of qualifications to be classified as a REIT.

We should note that instead of earnings, REITs report funds from operations or FFO, but investors can view them as essentially the same for our purposes. Meanwhile, one distinct advantage is that REITs must pay at least 90% of their taxable income in dividends to shareholders. Clearly, this means REITs are great options for income investors.

Here are three highly-ranked REITs that we found utilizing our Zacks Stock Screener that investors looking for income might want to buy for their 2020 portfolios…

Medical Properties Trust, Inc. MPW

Medical Properties Trust is a REIT that works to offer health-industry operators access to capital to help fund technology upgrades, hiring, facility improvements, and new construction through long-term net leases of real estate assets. MPW, which has become one of the world’s largest owners of hospitals, boasting 390 facilities across eight countries, announced in early January that it completed its acquisition of the real estate interests of 30 hospitals in the UK for £1.5 billion.

Shares of the Birmingham, Alabama-based firm have surged 28% in the last six months to outpace its industry’s 8% average and the S&P’s 12%. The stock, which hit a new 52-week high Tuesday, is now up 71% in the past two years. This helps make its 4.67% dividend yield all the more impressive. Medical Properties Trust’s yield more than doubles the 10-year U.S. Treasury note’s 1.76%. And MPW’s positive earnings revision activity helps it hold a Zacks Rank #2 (Buy) and an “A” grade for Momentum in our Style Scores system.

Our current Zacks estimates call for Medical Properties Trust’s fiscal 2019 funds from operations to slip 3.6% on roughly 6.5% stronger revenue. But Q4 FY19 looks as though it will help kick start a strong 2020, with sales projected to climb 34.3% to help lift its bottom line by 16%. Then its fiscal 2020 revenue is projected to jump 33% above our 2019 estimate to reach $1.11 billion, with its FFO set to surge 26%.

VICI Properties Inc. VICI

VICI Properties is a REIT that focuses on the gaming, hospitality, and entertainment spaces. The New York-based firm’s portfolio features “22 market-leading gaming properties,” which includes Caesars Palace CZR in Las Vegas as well as golf courses and nightclubs. Last month, the company completed an acquisition of three regional gaming properties from Eldorado Resorts ERI and entered into a master lease agreement with Century Casinos CNTY.

VICI Properties is expected to see its 2019 FFO pop 4.2%, even though its sales are expected to dip marginally. The company’s Q1 fiscal 2020 revenue is then projected jump 16%, with fiscal 2020 projected to surge 29.4% above our 2019 estimate to reach $1.15 billion. This top-line expansion is expected to lift VICI’s bottom line by 14.3% in 2020.

VICI’s positive bottom-line revisions help it hold a Zacks Rank #2 (Buy) right now. The stock, like MPW, jumped to hit a new 52-week high Tuesday. VICI shares are up 11% in the past three months and 26% over the last year. And in keeping with the theme, VICI’s dividend currently yields 4.53%. Plus, VICI is trading at 15.4X forward 12-month Zacks earnings estimates. This marks a discount against its industry’s 18.3X average and the S&P’s 19.2X.

Camden Property Trust CPT

Camden Property Trust focuses mainly on ownership, management, development, redevelopment, acquisition and construction of multifamily apartment communities. The Houston, Texas-based company owns and operates roughly 160 communities that total 56,000 apartments around the U.S. from Southern California to Florida.

Shares of Camden have climbed 21% in the last year and 30% over the past two years to sit just off their 52-week highs. CPT is currently a Zacks Rank #2 (Buy), based in large part on its positive bottom-line estimate revisions for fiscal 2020. The stock also earns a “B” grade for Momentum and its dividend yields a solid 2.91% at the moment.

CPT’s fiscal 2019 revenue is expected to pop nearly 8% to hit $1.03 billion and help lift its FFO by 5.7%. Then, in fiscal 2020, Camden’s revenue is projected to climb 5.5% above our current full-year estimate. This climb is expected to help lift its bottom line another 7.5% higher.

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Caesars Entertainment Corporation (CZR) : Free Stock Analysis Report
 
Century Casinos, Inc. (CNTY) : Free Stock Analysis Report
 
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Camden Property Trust (CPT) : Free Stock Analysis Report
 
Medical Properties Trust, Inc. (MPW) : Free Stock Analysis Report
 
VICI Properties Inc. (VICI) : Free Stock Analysis Report
 
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