Getting maximum returns as an investor isn’t always about the stocks you buy, as it’s also important to buy them at the right time. Everyone talks about “buying when there’s blood in the streets”, but it’s not easy to find the courage to do so.
Most real estate investment trusts (REITs) have been in a bear market since the start of 2022. Vanguard Real Estate Index ETF (NYSE: VNQ), which tracks higher quality REITs, traded near $110 in January 2022 but fell to lows of $70 in October 2022. It has since recovered somewhat, but only at around $84 – still 23% off its highs.
As REIT prices have fallen, yields have risen dramatically, but with higher yields comes speculation as to whether dividends will hold. Successful investors learn to ignore all the talk and instead focus on stocks that seem undervalued, especially if dividend yields are high.
The market has a long history of oversold REITs in the face of a potential recession, providing investors with an incredible opportunity to “lock in” massive returns. Access insights from Benzinga’s real estate research team with the free weekly REIT report.
Take a look at three REITs with double-digit dividends that also posted double-digit returns over the past four weeks. These stocks are so far off the 2022 highs that they may still have a lot of wiggle room.
TPG RE Finance Trust Inc. (NYSE: TRTX), a subsidiary of TPG Real Estate, is an on-balance sheet lender with a $5.3 billion portfolio of first mortgages in excess of $50 million in geographically diverse primary and secondary markets in the States -United.
TPG RE Finance Trust fell 37.85% in 2022. In February, it began to rebound after fourth quarter operating results in which earnings per share (EPS) under generally accepted accounting principles (GAAP) of $0.42 beat analyst estimates of $0.29. But on May 2, its first-quarter EPS of $0.05 missed estimates by $0.21. This news caused the shares to drop to $5.25, but soon after the price rallied back to a recent closing price of $7.78.
On June 13, JMP Securities analyst Steven DeLaney reiterated a market outperformance rating on TPG RE Finance Trust and maintained his $10 price target. Raymond James analyst Stephen Laws also has a strong buy rating and $9 price target on TPG RE Finance Trust. Analysts predict an increase in annual revenue of almost 30% in 2023 compared to 2022.
On June 14, TPG RE Finance Trust announced that its board of directors had declared a quarterly dividend of $0.24 per share, payable July 25 to shareholders of record as of June 28. The annual dividend of $0.96 per share currently yields 12.34%.
Over the past month, TPG RE Finance has led all REITs with a gain of 36.97%.
Uniti Group Inc. (NASDAQ: UNIT) is a Little Rock, Arkansas-based specialty REIT that acquires and builds critical communications infrastructure in the form of high-speed fiber optic, copper and coaxial networks.
Uniti Group owns and operates 137,000 miles of fiber route covering 275,000 commercial buildings in 300 metropolitan markets, with most of its network in the Eastern and Midwestern United States. It is one of the top 10 fiber providers in the United States today, and its fiber optic leasing generates about 70% of its total revenue.
On May 4, it released its first quarter operating results. Adjusted funds from operations (AFFO) of $0.39 exceeded estimate by $0.16, and revenue of $289.82 million exceeded estimate by $2.93 million and increased by 4 .2% year over year.
Despite the good results, analysts have not changed their opinion on Uniti Group recently. Morgan Stanley analyst Simon Flannery maintained an underweight rating on Uniti Group on June 1 while lowering the price target from $7 to $6. On May 30, RBC Capital Markets analyst Bora Lee maintained a Sector Perform rating on Uniti Group, but lowered the price target from $7 to $5.
But investors reacted differently. Uniti Group has been steadily rising since the end of April and over the past month it has increased by 22.97%. It paid a quarterly dividend of $0.15 on June 15. The annual dividend of $0.60 per share has been the same since 2020 and currently pays 13.19%.
Medical Properties Trust Inc. (NYSE: MPW) is a Birmingham, Alabama-based healthcare REIT that owns and operates 444 general acute care and other facilities in the United States and nine other countries, with locations in Europe and Australia. . He has a portfolio worth $19.7 billion.
Throughout 2022, Medical Properties Trust was out of favor with Wall Street. Articles in the Wall Street Journal and elsewhere have questioned a loan deal between Medical Properties Trust and Steward Health Services, its largest tenant, that drove prices down in the spring. The Street feared Steward was on the verge of bankruptcy, and investors were disappointed with the lack of an immediate response from Medical Properties Trust management to the WSJ report.
Short sellers came out in force, driving shares of Medical Properties Trust lower. At the end of January, there were 102.7 million shares sold short and a short ratio (the number of days needed to cover all short positions) of 8.3. Viceroy Research released a report alleging financial mismanagement, further bolstering short selling.
At the end of March, Medical Properties Trust, which traded at nearly $22 per share in January 2022, was below $7. But after the Federal Reserve announced it would pull back from larger rate hikes, most REITs, including Medical Properties Trust, began to rebound.
On May 23, Medical Properties Trust announced positive news regarding one of its major tenants, Prospect Medical Holdings Inc. Subsidiaries of Prospect Medical Holdings had just secured $375 million in new loans from third-party lenders to maintain operations hospitals with cash. Shares of Medical Properties Trust began to climb on the news.
Investors seem to love it or hate it, but over the past four weeks, Medical Properties Trust has climbed 19.53%. The annual dividend of $1.16 per share currently yields 12.64%.
Weekly FPI Report: REITs are one of the most misunderstood investment options, making it difficult for investors to spot incredible opportunities until it’s too late. Benzinga’s in-house real estate research team has worked hard to identify the best opportunities in today’s market, which you can access for free by subscribing to Benzinga’s weekly REIT report.
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This article 3 REITs with Double Digit Dividends and Yields originally appeared on Benzinga.com
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