Dividend Stocks

Hot Stocks: The 3 Best Opportunities for Investing in REITs

Not too long ago, I came across an article about commercial property opportunities and my mind immediately went to REIT stocks or securities tied to real estate investment trusts. It wasn’t so much about the story but the public comments that made the content memorable.

Apparently, experts in the field believe that there’s a massive bargain offered right now in commercial real estate. That makes sense because of the residual impact of the Covid-19 crisis. However, internet commenters balked at the price necessary to participate in the deals, which numbered well into the millions. That’s not exactly an amount the average retail investor throws around casually.

So yes, there might be viable prospects in commercial real estate but you might not be able to access them. But don’t fret – that’s where these REIT stocks may save the day.

EPR Properties (EPR)

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Based in Kansas City, Missouri, EPR Properties (NYSE:EPR) represents the leading diversified experiential net lease REIT. Per its public profile, the company specializes in select enduring experiential properties in the commercial property industry. It focuses on venues that create value by facilitating out-of-home leisure and recreation experiences. Since the start of the year, EPR stock incurred a loss of 14%.

Granted, that’s not the start that management was looking for. Fundamentally, there are some extenuating circumstances. With the consumer economy suffering multiple headwinds of high inflation, high borrowing costs and tech-sector layoffs, many folks have decided to trim their spending. At the same time, consumers may also be prioritizing experiences and that bodes well for EPR stock.

To be fair, for 2024, analysts are forecasting a down year, projecting earnings per share of $2.62 on sales of $617.76 million. Last year, the company posted EPS of $1.97 on sales of $705.67 million. However, the high-side revenue estimate calls for $717 million, which may be more realistic based on travel-related consumer sentiment. Thus, it’s one of the REIT stocks to consider.

Welltower (WELL)

WellTower (WELL) logo displayed on a website and magnified

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Headquartered in Toledo, Ohio, Welltower (NYSE:WELL) in many ways sells itself. According to its corporate profile, the REIT invests with leading senior housing operators, post-acute providers, and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Since the start of the year, WELL gained over 3% of its market value.

Fundamentally, senior care service providers are attractive because of demographic realities. Millions of baby boomers will be retiring and many will require care. Yes, it’s true that last fiscal year, Welltower’s earnings performances were shaky. Overall, the average surprise came out to 12.33% below parity. There were some good quarters and some really bad ones.

However, for 2024, experts project that EPS will land at $1.27 on sales of $7.46 billion. That’s very favorable to 2023’s print of profits of 66 cents per share on sales of $6.64 billion.

Also, the REIT pays a forward dividend yield of 2.62%. Covering experts peg shares a moderate buy with a $99.21 average price target.

Realty Income (O)

realty income logo highlighted by a magnifying glass on a web browser

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Probably the most famous of REIT stocks, Realty Income (NYSE:O) is arguably best known for providing a monthly dividend. It’s also a sizable one at a forward yield of 5.88%. Yes, the payout ratio is elevated but here’s the thing about REIT stocks. Generally, these entities run a higher ratio than non-REITs based on their distinct business structure.

Fundamentally, what’s really appealing about Realty is the core underlying industry. The company benefits from cash flows from over 15,450 real estate properties. This massive footprint encompasses businesses of all stripes, particularly brands that you shop at every day. Unless you envision a world where people no longer need home-improvement products, for instance, Realty should be a solid idea.

Okay, Realty may have incurred a mixed performance in fiscal 2023. However, analysts are looking for a rebound in 2024, projecting EPS of $1.41 on sales of $4.87 billion. That’s much better than last year’s EPS of $1.26 on sales of $4.08 billion.

Finally, O stock carries a moderate buy view with a $60.38 price target. It’s easily one of the REIT stocks to buy.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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