Top 3 Real Estate Investment Trusts to Invest in Heavily in April

Top 3 Real Estate Investment Trusts to Invest in Heavily in April

Real estate is one of society’s oldest wealth creation tools. There are only a limited amount of goods in the world and people will always need them. But most investors do not have the financial means necessary to invest heavily in real estate.

It’s there that real estate investment trusts, or REIT, can help you. They offer investors the flexibility to buy and sell stocks and the benefit of owning real estate: passive income.

Here are three fantastic REITs that investors should consider buying in April.

Why REITs Make Great Dividend Stocks

REITs buy and rent real estate. They don’t pay corporate tax as long as they pay out at least 90% of their profits to shareholders in the form of dividends, which is why they generate such good income stocks. Many REITs have much higher dividend yields than you’ll typically find from other companies.

As you will see below, there are different types of real estate. REITs generally stick to what they are good at, so they usually focus on a specific type of real estate. Some examples include commercial properties, hospitals and healthcare facilities, apartment buildings, warehouses, etc.

You can build a diverse portfolio of REITs and own different types of properties. Here are three great examples:

1. A leader in logistics real estate

Prologue (NYSE:PLD) is a REIT that focuses on high-tech distribution centers. It leases 1.2 billion square feet of real estate on four continents.

Many of its tenants are companies in various industries, ranging from retailers to automobile manufacturers. It is also one of the largest REITs with approximately $120 billion in capital. market capitalization.

The company’s dividend yield is just under 3% at the current stock price. REITs pay their dividends from cash flow, called funds from operations (FFO), which is like profits for traditional corporations.

The dividend is very well funded. The dividend payout ratio is only 56% of FFO today, and the latest 10.3% increase announced by management should inspire confidence among shareholders. Prologis has paid and increased its dividend for 10 consecutive years.

Analysts expect profits to decline slightly this year, but to accelerate to double-digit growth for several years afterward. The stock trades at 21 times its estimated 2024 FFO, which is a fair price if Prologis’ FFO grows 11% to 13% per year, as analysts predict.

2. A blue-chip retail REIT

REIT NNN (NYSE:NNN) specializes in single-tenant commercial buildings. Think fast food restaurants, car washes and gas stations.

The company owns more than 3,500 properties in the United States and typically signs 10-year leases, giving NNN reliable revenue. It does very well in all economies because its tenants are recession-proof. People always need gas and grab a quick meal on the go in good times and bad.

The company has a long history of dividend growth to support this. Management has paid and increased the dividend for 35 consecutive years. It also offers an eye-watering 5% yield at the current share price. The dividend is amortized by a manageable dividend payout ratio of 64%, based on FFO.

You own NNN REIT for its stable, high-yielding dividend, not its growth. Analysts estimate that its FFO will grow at a rate of less than 10% over the long term, justifying a low valuation, which today is 13 times FFO. Consider this REIT if you want to earn passive income without stress.

3. A self-storage superstar

Public storage (NYSE:PSA) has 3,300 self-storage centers in the United States. Unlike many REITs, it also operates and manages the properties.

The advantage of Public Storage is that it can easily adjust its customer rates. It has more than two million customers and the average tenant stays there for seven to ten months, which is a good thing provided that the turnover is not too high.

The company is not a traditional dividend growth stock. Management already paid a special dividend and doesn’t increase its quarterly dividend every year, but that doesn’t necessarily mean the dividend is in trouble. The payout ratio stands at 67% of FFO and investors get a yield of over 4% at the current stock price.

Analysts expect FFO growth of between 5% and 10% in the coming years. This is another REIT that won’t wow you with growth, but will provide stable income to your portfolio and peace of mind. The stock is trading at a reasonable 17 times FFO today.

Should you invest $1,000 in Prologis right now?

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Justin Pope has no position in any of the stocks mentioned. The Motley Fool holds positions at and recommends Prologis. The Motley Fool recommends the following options: Long $90 January 2026 calls on Prologis. The Motley Fool has a disclosure policy.

3 REITs to Buy Hand Over Fist in April was originally published by The Motley Fool

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