There is an adage among real estate investors that “You can’t create any more land.” While you can always build higher, you still need the land. One of the best assets that most investors are underweighted on is real estate. Those that own a home are technically real estate investors, but home ownership does not produce any income, unless they are rental homes, which can be very capital intensive, not to mention time-consuming.
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We screened our 24/7 Wall St. real estate investment trust (REIT) universe looking for the highest yielding ones that are publicly traded. It should be noted that REITs can be very vulnerable to sharp increases in interest rates. However, the Federal Reserve already has telegraphed that the rate increases will begin this month and probably will happen at each meeting this year and next. But when they are complete, the federal funds rate will be at 2.50% to 2.75%. They were at 5.25% in 2007.
Six top REITs all pay a 5% or higher distribution and are rated Buy at top Wall Street firms. The big plus for investors looking to own the sector is that all have pulled back in price big time from highs posted near the end of 2021 and are offering outstanding entry points once again.
It is important to 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 it is increasing the distribution for the fourth quarter. Gladstone Commercial Corporation (NASDAQ: GOOD) is focused 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.
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