Real estate remains a great place for investors to build long-term wealth and boost their income. But not all real estate is the same. Some industries, like housing, have unique tail winds propelling them higher. Luckily for our last Best Real Estate Dividend Stocks List pick, it has been able to use its status in the sector to increase its dividend for more than 10 consecutive years!
In the search for the Best Real Estate Dividend Stocks, 16 factors are scored across Real Estate sector dividend stocks and only the best combination of attractive yield, dividend safety, returns potential and low returns risk receive a Buy rating. Our process is systematic, goal focused and designed for moderate risk investors with a long-term horizon seeking allocation to Real Estate.
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The secret to our pick’s success remains its focus on the residential real estate market. Rising interest rates, stricter lending standards, and dwindling home affordability have continued to buoy demand for apartment owners. Thanks to a series of smart M&A transactions, our pick is now one of the largest landlords in the nation, covering nearly 300 communities and over 100,000 apartment units. Better still, the vast bulk of those apartments are located in strong economic growth regions of the nation. With plenty of coverage in the Sunbelt region, our pick has been able to see its rents rise, boosting its cash flow enough to raise its dividend twice last year.
As such, our pick is a well-covered large-cap eREIT yielding an attractive 3.54% with a $5.600/shr forward dividend that is paid quarterly. Their $17.9B market cap ranks 19th out of 170 dividend stocks in the eREIT industry, the largest being Prologis (PLD) at $107.1B, and they have $4.5B in debt and $39.0M in cash.
Currently, our pick has mixed support from both the sell-side and buy-side. Analysts are overweight rated on average with expectations for ffo/shr to grow a modest 5% next year. Relative to the 52-week highs, the stock is currently underperforming the S&P 500 at -28% vs -17%, but is an average performing eREITs, which are -24% as a group.
Year-to-date, our pick has managed to return -1% vs 2% for the S&P 500 and 2% for the eREIT industry.
