“Final Four” is an eye-catching term, and will prompt maximum excitement for fans of the NCAA Men’s Division 1 Basketball Tournament when we see which teams win games among the “Elite Eight” on March 26.
But if you’re an income-seeking investor who doesn’t want to risk a dividend cut during a prolonged period of market volatility that could be followed by a recession, a team of Jefferies analysts led by Jonathan Peterson has already narrowed down a group. 76 publicly traded real estate investment trusts in their “Final Four”. These are companies that have a good track record for increasing payouts and Peterson expects to continue to do so over the next three years.
A REIT is a company that owns property or invests in mortgage-backed securities and distributes at least 90% of its income to shareholders in the form of dividends, in return for tax benefits. Most dividends received by investors are taxed as ordinary income.
There are two broad types of REITs. An equity REIT holds the property and rents it out. A mortgage REIT either acts as a lender, or invests in mortgage-backed securities, or both.
Narrowing the “Elite Eight” of REITs to the “Final Four”
In a report on March 17, Peterson wrote that only 22 of the 76 publicly traded US REITs that have existed for at least 15 years have avoided cutting their dividends. He noted that “the list of veteran dividend payers is not heavily weighted for one subsector,” and that the key to selecting the best performers for the next 15 years “boils down to the quality and sustainability of their current dividends.” Is.”
For its “elite eight” REITs, Jefferies narrowed the list to companies with a “solid dividend outlook” before narrowing it down to a “final four” that it rates a “buy” and is on the firm’s “persistence list.” Is.
Here are the Jefferies “elite eight” REIT stocks, with the “final four” in bold and at the top of the list. Each group is ranked by current dividend yield. The rightmost column is Jefferies’ expected compound annual growth rate (CAGR) for the dividend payout from 2022 to 2025.
| company | anchor | concentration | dividend yield | Expected 3 Year Dividend CAGR |
| National Storage Affiliates Trust |
NSA, |
self Storage |
5.25% |
4.0% |
| LXP Industrial Trust |
lxp, |
warehouse and logistics |
5.03% |
7.4% |
| Healthpeak Properties Inc. |
peak, |
Health care |
5.61% |
3.1% |
| vici properties inc. |
VCI, |
leisure properties |
4.93% |
7.2% |
|
gaming and leisure properties inc. |
GLPI, |
leisure properties |
5.73% |
2.4% |
|
Acadia Realty Trust |
akr, |
retail |
5.28% |
5.9% |
|
Realty Income Corp. |
O, |
retail |
4.90% |
3.0% |
|
Kymco Realty Corporation |
kim, |
retail |
5.01% |
2.7% |
|
Source: FactSet |
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Click on the tickers for more information on each REIT. If you’re interested in an individual stock, it’s best to do your own research and form your own opinion about the company’s likelihood of succeeding for at least the next decade.
Read Tommy Kilgore’s detailed guide to the wealth of information available for free on the Marketwatch quote page.
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