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Keep Brexit Worries Aside: Buy These 5 REIT Stocks Right Now
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Brexit fallout is more of a political crisis, rather than a fundamental drawback in the overall financial system that led to the 2008-09 disaster. However, referendum by the Britons to part with the European Union has had serious financial repercussions.
Uncertainty and fear associated with Brexit have ravaged the bourses across the globe, forcing the panic-stricken investors to flee to the safety of government bonds. The REITs with the safety net of dividends have also attracted investors’ attention.
Though the markets have once again sprung into life with Brexit fears almost overdone, the tendency to invest in instruments with steady returns should keep REIT stocks in focus.
An increased investment in treasury bonds raised their prices. Consequently, the yields on the benchmark 10-year Treasury note declined to almost record low. Given this tumultuous market situation and comparatively less income-yielding government bonds, REITs with decent dividend yields and earnings growth potential should be wise bets for the investors. (Read more: 4 REIT Stocks to Consider as U.S. Treasury Yield Declines)
REITs in Sweet Spot Amid Brexit Worry
Post Brexit, the U.K. is encountering unprecedented economic and political uncertainty. British pound crashed to its lowest level since 1985, strengthening the dollar. Given the crimped U.S. exporters’ profits, turbulent U.K. economic outlook and global economic concerns, it is expected that the Fed will not squander the gains it has made by pursuing a cheap monetary policy and not raise rate of interest this year.
The expectation of a low interest rate environment has come as a boon to the REIT sector. This will allow the REITs to borrow at a very low rate and utilize the funds for expanding their operations.
There are, however, some REITs such as Gramercy Property Trust Inc. , Prologis, Inc. (PLD - Free Report) , W. P. Carey Inc. (WPC - Free Report) and Global Net Lease, Inc. (GNL - Free Report) which were hit given their exposure to the European markets. However, there are relatively few REITs which have significant exposure to the U.K. market and hence, the chances of a sudden collapse of the industry due to Brexit is slim. Instead, the broader ripple effect on the equities and the associated uncertainty which is likely to stay for some time, have placed the overall U.S. REIT industry in a sweet spot amid Brexit worry.
Stocks to Consider
As such, we have handpicked REIT stocks with a favorable Zacks Rank, as a Zacks Rank of #1 (Strong Buy) or #2 (Buy) indicate higher chances of outperforming the market over the next 1–3 months.
We have specifically considered only those stocks with a dividend yield of more than 4% and have decent earnings growth potential. Here are five such stocks for your consideration:
Irving, TX-based FelCor Lodging Trust Inc. is engaged in investment and management of properties in the hospitality industry.
Wyomissing, PA-based Gaming and Leisure Properties, Inc. (GLPI - Free Report) is engaged primarily in owning, acquiring, developing, expanding, managing, and leasing gaming and related facilities.
Based in Williamsburg, VA, Sotherly Hotels Inc. (SOHO - Free Report) is engaged in the acquisition, renovation and up-branding & repositioning of upscale to upper upscale full-service hotels primarily in the Mid-Atlantic and Southern U.S.
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Keep Brexit Worries Aside: Buy These 5 REIT Stocks Right Now
Brexit fallout is more of a political crisis, rather than a fundamental drawback in the overall financial system that led to the 2008-09 disaster. However, referendum by the Britons to part with the European Union has had serious financial repercussions.
Uncertainty and fear associated with Brexit have ravaged the bourses across the globe, forcing the panic-stricken investors to flee to the safety of government bonds. The REITs with the safety net of dividends have also attracted investors’ attention.
Though the markets have once again sprung into life with Brexit fears almost overdone, the tendency to invest in instruments with steady returns should keep REIT stocks in focus.
An increased investment in treasury bonds raised their prices. Consequently, the yields on the benchmark 10-year Treasury note declined to almost record low. Given this tumultuous market situation and comparatively less income-yielding government bonds, REITs with decent dividend yields and earnings growth potential should be wise bets for the investors. (Read more: 4 REIT Stocks to Consider as U.S. Treasury Yield Declines)
REITs in Sweet Spot Amid Brexit Worry
Post Brexit, the U.K. is encountering unprecedented economic and political uncertainty. British pound crashed to its lowest level since 1985, strengthening the dollar. Given the crimped U.S. exporters’ profits, turbulent U.K. economic outlook and global economic concerns, it is expected that the Fed will not squander the gains it has made by pursuing a cheap monetary policy and not raise rate of interest this year.
The expectation of a low interest rate environment has come as a boon to the REIT sector. This will allow the REITs to borrow at a very low rate and utilize the funds for expanding their operations.
There are, however, some REITs such as Gramercy Property Trust Inc. , Prologis, Inc. (PLD - Free Report) , W. P. Carey Inc. (WPC - Free Report) and Global Net Lease, Inc. (GNL - Free Report) which were hit given their exposure to the European markets. However, there are relatively few REITs which have significant exposure to the U.K. market and hence, the chances of a sudden collapse of the industry due to Brexit is slim. Instead, the broader ripple effect on the equities and the associated uncertainty which is likely to stay for some time, have placed the overall U.S. REIT industry in a sweet spot amid Brexit worry.
Stocks to Consider
As such, we have handpicked REIT stocks with a favorable Zacks Rank, as a Zacks Rank of #1 (Strong Buy) or #2 (Buy) indicate higher chances of outperforming the market over the next 1–3 months.
We have specifically considered only those stocks with a dividend yield of more than 4% and have decent earnings growth potential.
Here are five such stocks for your consideration:
Irving, TX-based FelCor Lodging Trust Inc. is engaged in investment and management of properties in the hospitality industry.
Zacks Rank #2
Dividend Yield (%) = 4.12
Projected EPS Growth (Q1) = 24.11%
Projected EPS Growth (F1) = 15.66%
Wyomissing, PA-based Gaming and Leisure Properties, Inc. (GLPI - Free Report) is engaged primarily in owning, acquiring, developing, expanding, managing, and leasing gaming and related facilities.
Zacks Rank #2
Dividend Yield (%) = 6.59
Projected EPS Growth (Q1) = 6.67%
Projected EPS Growth (F1) = 4.71%
Apple Hospitality REIT, Inc. (APLE - Free Report) is a Richmond, VA-based hotel REIT with a portfolio of hotels, guest rooms and resorts.
Zacks Rank #1
Dividend Yield (%) = 6.55
Projected EPS Growth (Q1) =15.15%
Projected EPS Growth (F1) = 11.64%
TIER REIT, Inc is a Dallas, TX-based REIT which focuses on commercial office real estate in the U.S.
Zacks Rank #2
Dividend Yield (%) = 4.9
Projected EPS Growth (Q1) = 8.82%
Projected EPS Growth (F1) = 1.34%
Based in Williamsburg, VA, Sotherly Hotels Inc. (SOHO - Free Report) is engaged in the acquisition, renovation and up-branding & repositioning of upscale to upper upscale full-service hotels primarily in the Mid-Atlantic and Southern U.S.
Zacks Rank #1
Dividend Yield (%) = 6.7
Projected EPS Growth (Q1) = 9.62%
Projected EPS Growth (F1) = 26.00%
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>