John Freund is a high yield specialist for Todd Shaver's BullMarket. Here, he looks at two of his current favorite real estate investment trusts; both are focused on residential properties and are suitable for investors seeking income and growth.

Equity Residential (EQR), yielding 3.3%, is a REIT that operates multi-family residential properties in dense urban locales such as Los Angeles, San Francisco, New York and Boston. Its buildings are hip, stylish and modern, with property management teams that prioritize the customer experience above all else. Equity Residential’s buildings maintain strong appeal with the young urban Gen X and Millennial crowd.

With a nearly $25 billion market cap, Equity Residential is one of the largest residential REITs out there. The company had a strong 3Q18, posting same store revenue growth for the quarter of 2.3% — the top of their guidance range. That puts the company on track for 2.3% revenue growth for the year as well. Renewals increased by 5% for the quarter and occupancy stands at a staggering 96% across the board.

The company offers generous transition perks should residents wish to switch to another Equity property, including out of state, which helps buoy those retention rates. They also just posted their lowest turnover rate in history: only 16% of their units were in transition over the quarter.

The company also entered a new market this past quarter; it purchased two properties in Denver for a combined $275 million. The company is making a bet on Denver growing its 25-34 year old age group, which has indeed been expanding rapidly in the Mile High City over the past few years. This is a company that is poised for growth; we expect this REIT to pick up steam as we enter 2019.

New Residential Investment Corp. (NRZ), with a yield of 11.6%, pioneered the Mortgage Servicing Rights (MSR) business. Essentially, the company purchases the right to service mortgages from banks and institutions that hold the underlying loans.

Banks were forced to sell off their MSRs in the wake of The Great Recession. New Residential spotted an opportunity and pounced, and the company became a “hidden gem” in the process. Thanks to their stellar track record, they’re not so hidden anymore.

New Residential benefits from rising interest rates, which make MSRs more valuable since homeowners opt not to refinance and hang onto their mortgages for longer. That means mortgage service providers like New Residential extend their revenue generation for longer periods of time.

As a result, book value has increased 40% over the last three years to an all-time high of $16.87. New Residential has also increased its dividend 9% over the last three years, again while the vast majority of mortgage REITs have been slashing dividends thanks to the rate hikes. This is a stock that provides an excellent buffer against a climate of rising interest rates.

Management has been top-notch when it comes to providing value for investors, and we believe they will continue the trend. Don’t be scared off by Wall Street’s kneejerk reaction to the stock sale. This is a fabulous company with strong fundamentals and powerful macro-economic tailwinds.

The recent dip presents a buying opportunity, as shares will soon rebound once Wall Street remembers how revolutionary this company’s business model truly is.

Subscribe to The Bull Market Report here…