Real estate investment trusts, or REITs, are companies that own and operate income-producing real estate in the property sector. REITs offer several benefits to investors, including high dividend payouts. REITs are required to distribute 90% or more of their profits to shareholders as dividends. The large dividend payments make REITs attractive to income investors who are hunting for yield.
Additionally, REITs allow investors to speculate on and dabble in sections of the real estate market without having to buy individual properties themselves. Owing to their high dividends and focus on the real estate market, REITs are often a stable choice during times of market volatility. Think a market crash is coming? Here are three real estate stocks to buy for a soft landing.
Simon Property Group (SPG)
Simon Property Group (NYSE:SPG) is a real estate investment trust. The firm has 232 property holdings and is the largest owner of shopping malls in the U.S. The company went through an extremely difficult time during the pandemic when most of its shopping malls were shut down. Those shutdowns later forced Simon Property Group to operate at reduced capacity. Consequently, SPG stock is down 36% over the last five years. However, more recently, the share price has been recovering, rising 14% in the last year.
Trading at 20 times forward earnings, SPG stock looks reasonably valued right now. And it pays shareholders a strong quarterly dividend of $1.90 per share, which yields over 6.50%. Few other stocks have as generous a quarterly payout.
With the Covid-19 crisis behind it and consumers back to shopping in person, Simon Property Group looks poised for further gains. The median price target on SPG stock is currently $125.50, implying a 10% upside from current levels.
American Tower (AMT)
American Tower (NYSE:AMT) owns and operates towers that are essential for fifth-generation (5G) signal broadcasts. Currently, the company owns more than 200,000 communications sites globally, including more than 40,000 towers and broadcast sites in the U.S. and Canada. The company makes money by leasing space on its towers to telecommunication companies that use the towers for signal antennas and 5G equipment.
AMT stock has struggled recently, having declined by almost 30% over the last 12 months. The pullback has been due to higher interest rate expenses on its $39 billion of debt (the company funds its land purchases and tower construction with debt). However, there are still reasons to like AMT stock. The company currently offers a quarterly dividend of $1.57 per quarter for a yield of roughly 3.50%. Over the last 10 years, American Tower has increased its quarterly payout by 486%.
Boston Properties (BXP)
Boston Properties (NYSE:BXP) is a real estate investment trust that invests in top-tier office space across the U.S., from New York City to Los Angeles. The company currently owns nearly 200 commercial real estate properties that combined have 54.1 million square feet of office space.
Boston Properties has had a tough go of it since the pandemic struck in 2020. With remote work continuing and many companies giving up their office leases, Boston Properties has struggled.
BXP stock has been flat so far in 2023. However, over the past five years, the stock has fallen nearly 50%, pushing its price-earnings (P/E) ratio down to an attractive level of 15. Current trends look challenging. However, BXP stock offers a hefty quarterly dividend payment of 98 cents, which translates to a yield approaching 6%.
Barclays (LON:BARC) bank recently raised its price target on the stock to $65 from $58, saying that it sees potential in Boston Properties for further growth and success in the real estate sector.
On the date of publication, Joel Baglole 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.
