Real estate investment trust (REITs) are one of the best ways to have multiple investment goals fulfilled, invest in real estate, and get passive income that is substantial and can either cover inflation in full, or build a compounding capital by reinvesting the high dividends earned.
REITs are required to pay out at least 90% of their taxable income to shareholders so it is not a surprise to have REITs that pay very high dividend yields.
The following three REITs to buy in June 2022 are companies that will help you earn not only passive income but are long-term investments, to buy and hold. They are also suitable for exploring the fluctuations in the stock market, especially now during summer as the Federal Reserve is expected to raise the interest rates.
These REITs offer both upside potential and a very attractive dividend yield.
Simon Property Group (SPG)
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Simon Property Group (NYSE:SPG) is a real estate investment trust, that owns, develops, and manages retail real estate properties which primarily consist of regional malls, premium outlets, and mills.
Its properties are in North America, Europe, and Asia. The company was founded in 1993, with its headquarters in Indianapolis.
What are some top things to like about SPG stock? The first-quarter 2022 financial results showed funds from operations (FFO) per share of $2.78 that were better than the Zacks Consensus Estimate of $2.73.
The REIT raised its 2022 FFO per share outlook and announced a dividend hike. The quarterly dividend was raised to $1.70 per share, versus $1.65 per share, an increase of 3%.
The 2022 FFO per share guidance was raised in the range of $11.60-$11.75, compared to the previous range of $11.50-$11.70. The stock trades at a P/E Ratio (TTM) of 15.33, offering a forward dividend yield of 6.30%. The 1-year target estimate is $154.41, an upside potential of 40%.
Highwoods Properties (HIW)
Highwoods Properties (NYSE:HIW) is an office REIT that owns, develops, acquires, leases, and manages properties primarily in Atlanta, Charlotte, Nashville, Orlando, Pittsburgh, Raleigh, Richmond, and Tampa. The company was founded in 1978 and is headquartered in North Carolina.
The Q1 2022 results were very strong, with a beat on FFO normalized, EPS, and revenue.
The FFO Normalized figure of $0.34 was a beat by $0.04, EPS GAAP of $0.38 was a beat by $0.02 and revenue of $206.38 million was a beat by $4.56 million. The profitability metrics are excellent for Highwoods Properties.
The net income margin, operating margin, and return on equity currently are 39%, 30%, and 12.34% respectively. The annual revenue growth (TTM) is 8.61%, not bad at all.
The HIW stock trades at a P/E Ratio (TTM) of 13.05, offering a forward dividend yield of 5.23%.
The 1-year estimate target is $47.56, which is a potential upside of 23%.
Spirit Realty Capital (SRC)
Spirit Realty Capital (NYSE:SRC) is a premier net-lease REIT that primarily invests in single-tenant, operationally essential real estate assets, subject to long-term leases. The company was in 2003 and is headquartered in Dallas.
The first-quarter 2022 results were strong, showing a net income of $53.46 million versus a net loss of $4.05 a year ago, and a large increase in FFO. The FFO reported was $121.68 million, an increase of 110% compared to the FFO figure of $57.77 million in Q1 2021.
There was also a very strong operational performance, as occupancy reached 99.8%. Jackson Hsieh, President, and Chief Executive Officer said “Our company continued to perform exceptionally well in the first quarter, with our investment platform executing effectively in a competitive market. As we look forward, we believe our underwriting approach, coupled with our recently enhanced balance sheet, will allow us to pursue compelling risk adjusted return opportunities.”
The profitability is very strong, as the net income margin and operating margins are 35.7% and 47.3% respectively.
The annual revenue growth (TTM) of 29.35% is very supportive of the stock price. The SRC stock trades at a P/E Ratio (TTM) of 22.23 but offers a forward dividend yield of 6.12% and a potential upside potential of 21%, as the 1-year target estimate is $50.55.
On the date of publication, Stavros Georgiadis, CFA 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.