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Dividend Hunter Finds 5 Quality REITs

06/10/2015 9:00 am EST


Tim Plaehn

Investment Research Analyst, Investors Alley

Ever since the January high, REITs have been slowly shedding value and some great bargains have appeared as of late. Now is the best time to buy these five high-quality REITs that are still boosting their dividends every year, explains Tim Plaehn, editor of The Dividend Hunter.

It is an interesting phenomenon of the stock market that investors love stocks when share prices are high and buy more, but have trouble pulling the trigger to invest when prices have fallen.

Now that share prices are down more than 10% from three months ago, everyone is worried about REITs.

I think it would be a good time to get in on some quality real estate companies. Here are five large-cap REITs from a range of property sectors that have dropped by 15% or more from their peaks earlier in the year.

Host Hotels and Resorts (HST) is down close to 20% from its high and yields 4%. HST has increased its dividend by over 50% in the past year. I think the lodging sector will remain one of the best growth stories in commercial real estate.

Ventas (VTR) and Health Care REIT (HCN) are the two largest healthcare property REITs and have similar 4.6% yields and high single digit growth rates.

The VTR and HCN share prices are down about 16% from the highs, which means yields have moved up from less than 4%.

General Growth Properties (GGP) is down about 15% and yields 2.5%. The dividend was increased by more than 20% in the last year. GGP owns and operates high quality shopping malls.

Prologis (PLD) is down 15%, pushing the yield up to 3.7%. PLD owns and leases distribution facilities in the US, Europe, and Asia. The dividend grew by 18% over the last year.

High-yield REITs with a solid track record of increasing dividends are one of the core investments we use in my Monthly Dividend Paycheck portfolio.

And when the sector is in the midst of a mini-correction, we’re presented with an opportunity to add more at a discount.

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