High-flying growth stocks in the recent past no doubt grabbed attention with the stock market witnessing an impressive run. But things of late went haywire as the Federal Reserve deviated from its stance of aggressively hiking the interest rates and rather adopted a more dovish stand, indicating at the recent FOMC meeting that it was unlikely to increase the rates at all in 2019.
Consequently, investors’ sentiment took a hit as concerns are raised over the fate of the U.S. economy amid the ongoing trade war, the economic slowdown in Europe and China and the declining stimulus from the lower tax rates. Further adding to the woes is the cut in GDP growth and the inflation projections by the central bank. Fed’s statement read: “recent indicators point to slower growth of household spending and business fixed investment in the first quarter.”
Obviously, recessionary fears are brewing up in the market, compelling investors to look for safer havens, particularly toward the security of the government bonds. Demand for long-term bonds surged of late and the yield on the 10-year Treasury note went below the yield on the 3-month Treasury bill, resulting in an inversion of the yield curve.
All these brought back the interest-sensitive REITs to the limelight. This is because these are often treated as bond substitutes for the high-dividend paying nature. Particularly, government regulations mandate the REITs to disburse at least 90% of their taxable income in the form of dividends to shareholders each year.
Moreover, the underlying fundamentals of several asset categories in the REIT sector exhibit strength. The occupancy levels of properties are hovering near the record-high marks, indicating strong demand and the scope for generating steady revenues.
Therefore, backtracking to the REITs and scouting for stocks with better fundamentals and dividend seem an apt choice. We have handpicked stocks based on a favorable Zacks Rank, high dividend yield and other relevant metrics.
Plymouth Industrial REIT, Inc. PLYM focuses on the acquisition and management of the single and multi-tenant industrial properties. The company targets properties in the secondary and select primary markets across the United States and is based in Boston, MA.
This Zacks Rank #1 (Strong Buy) stock has a dividend yield of nearly 9%. Moreover, the Zacks Consensus Estimate for current-year funds from operations (FFO) per share has witnessed a 59.9% upward revision over the past 30 days to $2.59, reflecting analysts’ optimism on the stock.
Based in Newton, MA, Industrial Logistics Properties Trust ILPT is focused on the ownership and leasing of the industrial and logistics properties, primarily in the United States. This Zacks Rank #2 (Buy) player’s expected FFO per share growth for the current year is 7.4%. The Zacks Consensus Estimate for current-year FFO per share has moved nearly 1.8% north over the past 30 days. The stock has a dividend yield of 6.6%.
Headquartered in Tysons, VA, Park Hotels & Resorts Inc. PK is a lodging REIT with premium-branded hotels and resorts, majority of which are situated in the key United States markets with high barriers to entry. The stock with a Zacks Rank of 2 has a forward dividend yield of 5.8%. Moreover, the Zacks Consensus Estimate for current-year FFO per share has been revised nearly 1.3% upward over the past 30 days.
Lamar Advertising Company LAMR is one of the largest outdoor advertising companies in North America. It offers advertisers a variety of billboard, interstate logo and transit advertising formats, helping both the local businesses as well as the national brands reach out to broader audiences every day. This Zacks #2 Ranked company’s expected FFO per share growth for the current year is 6.0%. The stock has a forward dividend yield of around 5.0%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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