REITs are companies that own, operate, or finance real estate properties that produce income, such as apartment complexes or retail locations. These companies are heavily regulated and must meet a number of qualifications to be classified as a REIT, but they do offer investors a few distinct advantages.
First of all, real estate can be a very profitable investment sector when certain economic conditions are present. What’s more, REITs must pay at least 90% of their taxable income in dividends to shareholders, so they are a great option for income investors looking for steady payouts.
Luckily for Zacks readers, the proven Zacks Rank–which emphasizes earnings estimates and estimate revisions–works with REITs just as it would with any other company. The strongest REITs are going to be those with improving outlooks and great Zacks Ranks.
With that said, check out the REITs that are model says are impressive options right now:
Americold is a REIT focused on owning and operating temperature-controlled warehouses. It boasts the largest network of these sort of facilities in the world, making it a dominant force in global food distribution and retail industries. The company held an upsized IPO at $16 per share earlier this year and has been trending higher since then.
COLD is sporting a Zacks Rank #1 (Strong Buy) right now. The stock is trading at about 22.6x forward earnings, which is a slight premium to the average of its peers but within a reasonable range considering its industry dominance. Plus, Americold offers a dividend yield of 2.9% right now.
VICI Properties is primarily engaged in owning, acquiring, and developing gaming, hospitality and entertainment destinations. The company leases gaming property and develops golf courses. The company was spun off from Caesars and owns notable gaming facilities in Nevada, New Jersey, Louisiana, and more.
VICI is a Zacks Rank #2 (Buy) with great growth prospects. The company’s expected long-term annual EPS growth rate sits at 10% and with this in mind, the stock looks especially cheap with a P/E of 14.4 and PEG of 1.4. Also, the golf course operator presents a dividend yield of 4.9%.
Life Storage fully integrated REIT which acquires and manages self-storage properties. Locations are now under the Life Storage brand, having shifted over from Sovran Self Storage and Uncle Bob’s Self Storage. The company is one of the five largest self-store brands in the world.
LSI currently sports a Zacks Rank #2 (Buy) and presents a dividend yield 4.2%. The stock has shed about 6.8% from the 52-week highs it reached in late August, but the fundamentals look strong at these levels as earnings estimates trend higher. Plus, LSI has a beta of just 0.4 and should serve as a great low-volatility option in current conditions.
The Vanguard REIT Index Fund (VNQ) was unchanged in premarket trading Thursday. Year-to-date, VNQ has declined -0.17%, versus a 9.57% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Zacks Research.