Oppenheimer Still Recommends Top High-Yielding Dividend REITs

Banking, finance, and taxes

Published: April 4, 2016 10:35 am

Last Updated: January 13, 2020 11:11 am

The more Wall Street says that the bond proxies like real estate investment trusts (REITs) and utilities are overbought, the higher they seem to go. Oh sure they will sell off some, but the bottom line is that interest rates are going nowhere, and even if the Federal Reserve raises twice more this year, the fed funds rate would still be only 75 basis points, or three-quarters of 1%.

In a new research report, while Oppenheimer stays overweight the top REITs, the analysts do note that their bullish call is dependent on the relative continued health of the economy, and any slippage to recession could change everything. However, data have been good lately and the economy continues to add jobs. While REIT valuations are not compelling either way at current levels, they make sense for investors looking for some growth and income.

Oppenheimer has 12 companies rated Outperform. We screened for the four with the highest distributions. Remember, REIT distributions may contain return of principal.

Preferred Apartment Communities

This REIT has outstanding distributions and solid growth potential too. Preferred Apartment Communities Inc. (NYSE: APTS) was formed primarily to acquire and operate multifamily properties in select targeted markets throughout the United States. Part of the company’s business strategy is to enter into forward purchase contracts or purchase options for to-be-built multifamily communities and to may make real estate related loans, provide deposit arrangements or provide performance assurances, as may be necessary or appropriate, in connection with the construction of those communities and other properties.