Are Real Estate Investment Trusts (REITs) worth considering as investment options this year?
According to Wall Street’s best and brightest analysts, there are compelling reasons to believe so. The appeal of REITs lies in their robust balance sheets, attractive valuations, and consistent dividend payouts.
REITs experienced a decline last year, but it was largely driven by investor sentiment rather than business performance. Well, investor sentiment has turned, and these stocks are positioned for a comeback.
Today I’ll be covering three REITs that are also excellent dividend growth stocks to watch…
Rexford Industrial Realty Inc (REXR)
Rexford Industrial Realty (REXR) is a compelling investment option. As a dominant industrial property operator in Southern California’s thriving market, REXR commands top rates for its 400 properties with 44 million square feet of capacity. With projected revenue growth of nearly 30% in 2023 and about 20% in 2024, REXR demonstrates strong potential. Its long-term leases with reliable tenants offer an above-average dividend yield and payout relative to its pricing, making it even more attractive.
REXR is down year-to-date by 5.07%, has a 0.83 beta score, a PEG (price/earnings/growth) ratio of 3.01x, and a P/B (price to book) ratio of 1.48x; it is trading near the very bottom of its existing 52-week range. REXR most recently beat analysts’ EPS projections by 36.4%, reporting $0.30 per share vs. $0.22 per share as expected. REXR is forecast to report $196.9 million at $0.26 per share, with a 3-5 year EPS growth rate of 27.2% per year. REXR has an annual dividend yield of 2.93%, a quarterly payout of 38 cents ($1.52/year) per share, and a 139.47% payout ratio. With a 10-day average volume of 1.45 million shares, REXR has an average price target of $67.50, with a high of $77 and a low of $52, representing a potential price upside of 48.5% from current pricing. REXR has seven buy ratings and four hold ratings.
Prologis Inc (PLD)
Prologis (PLD), the largest REIT on this list and in the United States, with a market value of around $110 billion, excels in the crucial sector of warehouses and logistics facilities. With 1.2 billion square feet of space in 19 countries and serving approximately 6,600 diverse customers, PLD plays a pivotal role in the global economy amidst the era of e-commerce and just-in-time supply chains. PLD’s exceptional stability and projected revenue growth of nearly 40% this year, followed by 12% next year, validate its profitability. This is another REIT with a hefty dividend relative to its current pricing.
PLD’s stock is up year-to-date by 8.01%, has a positive SMA (simple moving average), a 0.99 beta, and is trading around the middle of its 52-week range. PLD has a PEG ratio of 0.55x, a P/B ratio of 2.13x, a D/E (debt to equity) measure of 47.61%, and a free cash flow of nearly $3.7 billion. For the current fiscal quarter, PLD is projected to report $1.7 billion in sales with an EPS of $0.98 per share and a forecasted 3-5 year EPS growth rate of 8.2%. PLD has a 2.86% annual dividend yield, with a quarterly payout of 87 cents ($3.48/year) per share and a payout ratio of 100.93%. With a 10-day average volume of 3.46 million shares, PLD has a median price target of $140.50, with a high of $170 and a low of $128; this indicates a potential price jump of almost 40%. PLD has 20 buy ratings and four hold ratings.
VICI Properties Inc (VICI)
VICI Properties (VICI) stands out among its peers as an appealing stock choice for investors. With a portfolio encompassing renowned entertainment destinations like Caesars Palace, the MGM Grand, and the Venetian Resort in Las Vegas, VICI owns 49 gaming facilities, over 60,000 hotel rooms, and more than 450 dining and nightlife establishments. Benefiting from a “risk-on” environment and strong consumer spending, VICI projects an impressive 30% revenue increase this year, along with nearly doubling its EPS (earnings per share) compared to fiscal 2022. As a REIT, VICI is committed to delivering at least 90% of taxable income to shareholders, translating into an attractive dividend for investors.
VICI is slightly down year-to-date by 2.72% and is trading near the bottom of its price range; with a 0.96 beta, there’s an excellent opportunity here. VICI shows trailing twelve-month asset growth of 92.50%, a PEG ratio of 2.89x, a P/B ratio of 1.34x, and an operating free cash flow of $2.17 billion. VICI is projected to post sales of $873.5 million at $0.64 per share for the current quarter and shows expected 3-5 year EPS growth of 7.8% per year. VICI has an annual dividend yield of 4.95%, with a quarterly payout of 39 cents ($1.56/year) per share and a payout ratio of 106.25%. With a 10-day average volume of 6.44 million shares, VICI’s average price target is $37, with a high of $43 and a low of $32, suggesting a potential price upside of 36.5% from where it sits currently. From analysts, VICI has 20 buy ratings and two hold ratings.
and then