Top Wall Street Strategist Says Smart Money Is Buying Big Dividend REITs: 5 Top Picks

While the market had a back-and-forth session Wednesday, the truth is that a bigger correction is probably on the way. When you get a pocket of strength, it makes sense to shift to assets that work well in a market not being pushed higher with central bank stimulus. One of those asset classes is real estate investment trusts (REITs). They combine the hard assets of real estate, in many forms from apartments to self-storage, and a flow of dependable income.

In a new report, well-respected analyst Jill Carey Hall of the BofA Securities Equity and Quant strategy team notes that many clients are shifting their strategy for income-producing assets. The report said this:

Since the ascent in the 10-year Treasury yield began in early December clients have shifted from buying bond-proxy Utilities stocks to Real Estate stocks (which we’ve found have typically outperformed in Late Cycle regimes and offer inflation-protected yield/dividend growth). While positioning has continued to rise since the GICS breakout, Real Estate remains underweight by fund managers.

If the segment is underweight by fund managers, that means there is a solid chance they will be adding the top companies soon, as we are clearly in the last of the cyclical bull market rally that began in the spring of 2020. We screened our 24/7 Wall St. research database looking for the highest-yielding REITs and found five top companies that growth and income investors should consider now. Remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Gladstone Commercial

This company recently announced a distribution increase for the fourth quarter. Gladstone Commercial Corp. (NASDAQ: GOOD) focuses on acquiring, owning and operating net leased industrial and office properties across the United States.

As of June 30, 2021, Gladstone owns a diversified portfolio of 121 office and industrial properties located in 27 states and leased to 106 tenants. The company has grown the portfolio in a consistent, disciplined manner at a rate of 18% per year since going public in 2003. It matches long-term leased properties with long-term debt to lock in the spread to create a durable, stable cash flow stream to fund monthly distributions to shareholders. Current occupancy stands at 96.5%, and that occupancy has never dipped below 95.0% since 2003.

Most importantly for investors, Gladstone has a track record of success, as exhibited by a history of strong distribution yields, consistent occupancy and more than 10 years of paying continuous monthly cash distributions.

Investors receive a 6.12% distribution. Colliers Securities has a Buy rating and a Wall Street high $26 price target, which may be headed higher soon. The consensus target is $25.00, and the last trade for Wednesday was reported at $24.09.

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