With REITs down after a tough summer, are there any that might be ready rise?
Real estate investment trusts (REITs), which had fared well in the years immediately following the financial crisis, have gone from being one of the best performing investments to the worst over the course of the summer.
REITs are actually not unlike mutual funds for real estate and property, in that they combine many different assets into a single trust or association. Many of them are diversified, and hold assets that range from shopping malls and warehouses to private homes and the mortgages that helped pay for them.
Particularly affected over the summer have been companies that buy and lease malls, as June retail numbers declined. A number of the retail giants - from Macy's (M) to Aeropostale (ARO) - have seen sales and stock prices alike decline over the summer. So it makes sense that the mall owners who house these stores have been feeling the pinch as well.
Bloomberg's index of mall REITs is down 18% for the year, as companies must grapple with a struggling retail sector, as well as rising costs. Treasury yields are up over a percent since May, and the cost of raising money through mortgage-backed securities has gone up as well.
REITs can be risky but they are also highly lucrative, with strong upsides and often very high dividend yields, in part because they're required to distribute at least 90% of their returns back to investors. For that reason, we decided to look at some REITs that are still doing well despite the tough market.
We screened for REITs with EPS growth projected into the next year. Then, to limit our results further, we looked for companies with higher dividend yields, so investors can be reassured that they'll make money even if the stock price fluctuates.
We were left with five stocks on our REIT list. Check them out:
Click on the interactive chart to see data over time.
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Do you see income opportunities in real estate? Use the list below as a starting point for your own analysis.
1.Colony Financial, Inc. (CLNY, Earnings, Analysts, Financials):Focuses on acquiring, originating, and managing commercial mortgage loans and other commercial real estate-related debt investments. Market cap at $1.28B, most recent closing price at $19.84.
EPS next year: 27.5%.
Dividend Yield: 7.6%
2.Investors Real Estate Trust (IRET, Earnings, Analysts, Financials):Engages in the ownership and operation of income-producing real estate properties in the United States. Market cap at $762.03M, most recent closing price at $8.07.
EPS next year: +238.1%.
Dividend Yield: 6.44%
3.One Liberty Properties Inc. (OLP, Earnings, Analysts, Financials):Engages in the acquisition, ownership, and management of commercial real estate properties in the United States. Market cap at $323.6M, most recent closing price at $21.80.
EPS next year: +6%.
Dividend Yield: 6.42%
4.ZAIS Financial Corp. (ZFC, Earnings, Analysts, Financials):Invests, finances, and manages various residential mortgage assets, real estate-related securities, and financial assets. Market cap at $136.62M, most recent closing price at $17.14.
EPS next year: +54.83%.
Dividend Yield: 10.5%
5.Simon Property Group Inc. (SPG, Earnings, Analysts, Financials):Engages in investment, ownership, and management of properties. Market cap at $46.01B, most recent closing price at $148.30.
EPS next year: +7.52%.
Dividend Yield: 3.1%
(List compiled by James Dennin. Analyst ratings sourced from Zacks Investment Research, all other data sourced from Finviz.)
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Analyze These Ideas: Getting StartedRead descriptions for all companies mentioned Access a performance overview for all stocks in the list Compare analyst ratings for the companies mentioned Compare analyst ratings to annual returns for stocks mentioned Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, FilingsColony Financial, Inc.(CLNY, Chart, Download SEC Filings) Investors Real Estate Trust(IRET, Chart, Download SEC Filings) One Liberty Properties Inc.(OLP, Chart, Download SEC Filings) ZAIS Financial Corp.(ZFC, Chart, Download SEC Filings) Simon Property Group Inc.(SPG, Chart, Download SEC Filings)
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