Foolproof Your Portfolio With These 3 REITs
Real estate investment trusts or REITs can offer investors sitting on the fence a viable approach to the market. Simply put, the structure of these businesses requires them to distribute the majority of their taxable income to shareholders. These dividends can provide support during periods of ambiguity, such as right now.
Another factor that helps REITs rise above other asset classes is liquidity. Owning physical real estate – while it may be considered the king of investments – represents an illiquid asset. However, REIT shares are publicly traded, allowing investors to buy and sell with ease.
Finally, REITs offer diversification. With these entities covering multiple sectors, you can expand the breadth of your holdings easily. On that note, below are some compelling ideas to foolproof your portfolio.
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Public Storage (PSA)
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One of the more popular REITs, Public Storage (NYSE:PSA) is the largest of the real estate trusts in its core business of self-storage services in the U.S. Fundamentally, the company should benefit from increased storage demand. In particular, with housing costs soaring, people can elect to downsize, putting their bulky possessions in storage while attempting to secure cozier (and thus cheaper) living situations.
In the market, PSA stock hasn’t exactly resonated with investors. Since the start of the year, shares lost 9% of market value. In the past 52 weeks, they’ve gone nowhere, shedding 4%. On the other hand, analysts believe that the current fiscal year should lead to sales of $4.63 billion, up 2.5% from the prior year. Also, in 2025, revenue may land at $4.85 billion.
To be fair, Public Storage isn’t the cheapest name among REITs. However, it’s consistently profitable, thus facilitating a forward dividend yield of 4.23%. Lastly, analysts rate shares a consensus moderate buy with a $305.08 price target, implying over 7% upside potential.
Realty Income (O)
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One of the most commonly discussed REITs, Realty Income (NYSE:O) invests in free-standing, single-tenant commercial properties in the domestic market. As well, it features similar investments in Spain and the U.K. A major plus that benefits O shareholders is that Realty pays a monthly dividend. This way, investors can more frequently reinvest their earnings, among other benefits.
Fundamentally, Realty should rise over the long run from everyday relevance. Unless you envision a future where pharmacies, groceries and consumer goods retailers would become obsolete, you can trust O stock. Further, the company’s forward dividend yield stands at 5.91%. Not only that, it enjoys 31 years of consecutive payout increases. That’s a status Realty won’t give up cheaply.
Analysts view shares as a consensus moderate buy with a $61.40 average price target. That implies growth potential of nearly 18%. Looking ahead, they anticipate current year revenue to land at $4.78 billion, a 17.1% lift from last year’s result.
Ventas (VTR)
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One of the most compelling REITs that offer a combination of capital gains potential and robust passive income, Ventas (NYSE:VTR) should be on your radar, especially if you don’t mind speculating a bit. Specializing in the ownership and management of research, medicine and healthcare facilities in the U.S., Canada and the U.K., Ventas may benefit richly from demographic realities.
A large part of its business centers on senior care facilities. Obviously, with the massive population rise from the baby boom entering its golden years, there will be huge demand for senior care-related services. Thus, VTR stock represents a numbers-based investment.
Unsurprisingly, analysts anticipate that current year sales will hit $4.78 billion, representing a 6.3% lift from the prior year. Looking out to 2025, they forecast revenue of $5.07 billion. While you’re waiting for the growth story to pan out, you can collect the forward dividend yield of 4.26%.
Finally, analysts rate shares a consensus moderate buy with a $54 price target, projecting 28% upside potential.
On the date of publication, Josh Enomoto 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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.
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