Earnings season offers unique opportunities. This is a time when management teams host conference calls for Wall Street analysts. Listening to calls or reading the transcripts gives me insight into how well companies are managed.
I believe that most analysts and investors do not pay enough attention to management teams and whether or not they do a good job.
And listening in this earnings season has made me surer than ever that these are the two best REITS for income investors…
However, economic and business conditions constantly change. Analyzing financial results to project from the past into the future leaves out how a business will be affected by changes in the economy and the business sector in which it operates.
When I compare companies in a sector, such as real estate investment trusts (REITs) or business development companies (BDCs), I focus on management’s comments and actions taken to keep their businesses on a positive trajectory. Over the long term, superior management will produce superior results. The better management teams typically share much of what they see and do during the quarterly calls. Here are a couple of my favorite companies and some comments from the recent quarterly discussions.
In my opinion, Arbor Realty Trust (ABR) is the best finance REIT. Arbor focuses on financial solutions for the multi-family property sector. Arbor has increased its dividend in twelve out of the last fourteen quarters, growing by 43%. The company also has the lowest payout ratio in the finance REIT group. Here is a representative quote from CEO Ivan Kaufman:
As we’ve discussed many times, we’ve been laser-focused over the last two years and preparing for what we felt would be a very challenging recessionary environment. In fact, unlike others in this space, we’ve been conducting ourselves as if we have been in a recession for over a year now.
On the property REIT side, Apartment Income REIT Corp (AIRC), also known as AIR, has one of the top management teams in the…
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