These REITs are sweet
In California as elsewhere, a real estate investment trust (REIT) offers an avenue for any investor to take advantage of a robust market.
In fact, the Securities and Exchanges Commission (SEC) states that REITs must pay out 90% of all taxable income to shareholders annually. This usually comes in the form of dividends, which provide an excellent source of income. Here are three to consider.
1. Essex Property Trust
The Essex Property Trust (NYSE: ESS) is an apartment ownership entity located primarily in northern California, Los Angeles and Orange County (as well as Seattle).
Essex stock has already excelled in 2023. It continues to beat earnings estimates; in the first quarter of 2023, net income per share hit $2.38 (compared to $1.12 in 2022). Its funds from operations (FFO) have already jumped 8.3%, with dividends up 5% — the company’s 29th consecutive annual increase. That puts it well within dividend aristocrat status.
The results led ESS to increase its full-year guidance, with the trust aiming for a net income per diluted share between $6.36 and $6.74. It now offers a dividend yield around 3.9%, yet also provides a potential value play with shares down 7.5% year over year.
While apartments and residences certainly appeal to investors, logistics real estate also holds promise. Prologis (NYSE: PLD) works markets for business-to-business, retail stores and online fulfillment locations.
Located in San Francisco, Prologis oversees 5,000 buildings comprising 1.2-billion square feet in 19 countries across North America, Latin America, Europe and Asia. It continues to acquire new businesses as well, along with properties and development projects. So while you get exposure to California, you also benefit from a highly diversified global property portfolio.
Prologis stock continues to show resilience thanks to high occupancy rates. It holds a dividend yield around 2.9%, and year over year is up 8.9%.
3. Medical Properties Trust
Medical Properties Trust (NYSE: MPW) is one of the largest hospital real estate owners in the world, with 444 facilities in 10 countries and several in California. It continues to focus on growth through acquisitions and recapitalizations.
What’s great about hospitals? They hold long lease agreements and high occupancy rates. Medical Properties Trust allows these hospitals to unlock the value of their real estate so the locations can upgrade themselves. This increases value to the trust in the process, allowing for a significantly high dividend yield.
How high? Medical Properties Trust offers a whopping divident yield around 12.7% — though that may not last as shares are down 36.4% year-over-year.
No matter which option you choose, there are certainly smart ways to get in on real estate in California — and by connection worldwide. But instead of buying properties you’ll buy shares — and rather than move into a home, you’ll move in on profits and dividends that could potentially help you buy one.
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