One man’s trash is another man’s treasure.
We review 3 big-dividend REITs that sold off hard.
We believe they are worth considering for investment.
We conclude with a critically important takeaway.
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IvelinRadkov/iStock via Getty Images One man’s trash is another man’s treasure. That’s how we feel about the three big-dividend REITs we review in this report. REITs in general got hit particularly hard during the pandemic, and not all them have recovered. We start this report off by reviewing REIT performance since the start of the pandemic. Next, we share data on over 50 big-dividend REITs (4.0% yields and up), including performance, yields, dividend history, industry information and more. Then, we get into the details on three that have been hit particularly hard and are worth considering for investment. We conclude with a critically important takeaway for investors.
And for reference, according to Dictionary.com , dumpster diving is: “The practice of foraging in garbage that has been put out on the street in dumpsters, garbage cans, etc., for discarded items that may still be valuable, useful, or fixable.” (-that’s how we feel about these 3 REITs) The Pandemic Hit REITs Hard:
As mentioned, REITs got hit particularly hard during the pandemic, as you can see in the following chart that compares REIT performance (NYSEARCA: XLRE ) versus the S&P 500 (NYSEARCA: SPY ) and growth stocks (NYSEARCA: IWF ) (NYSEARCA: ARKK ). (source: YCharts)
Social distancing lockdowns hit property REITs hard, while the bond-market liquidity crunch was devastating to many mortgage REITs, and industrial REITs (that were part of the online shopping supply chain) fared somewhat better (although supply chain issues are now increasingly building). (source: YCharts) 50 Big-Dividend REITs (4.0% Yields and Up):
In the following table, you can see the starkly different performance for most REITs so far this year versus the last 2-years. The difference, of course, is the pandemic. Even though many REITs are up big in 2021, they don’t fare so well in the 2-year performance (total return) column. For your consideration, the following table includes data on not just performance, but also yield, dividend history and more (and it’s sorted by Industry). You’ll likely notice at least a few of your favorites on this list. For example, Realty Income ( O ) is the biggest (on this list), and Iron Mountain ( IRM ) has a lot of short interest. This list can be useful as you consider REIT opportunities, such as those we review in the next section. 3 Big-Dividend “Dumpster Dive” REITs Worth Considering
The three REITs we review next all face significant near-term negativity. However, if you can handle the volatility, the share prices have upside, and that is in addition to the big dividends that they each pay. Omega Healthcare Investors ( OHI ), Yield 9.0%
Omega Healthcare Investors is a big-dividend healthcare REIT that is facing very serious challenges, and as such, the shares have sold off hard this year. (source: YCharts)
Specifically, the already significant challenges (that many of Omega’s Skilled Nursing Facility operators were already facing) have been exacerbated to the point where Omega’s dividend yield recently inflated to 9.0% and its FFO multiples are depressed. We just released a very detailed report on Omega describing four major pros (good things) and cons (bad things), including: It’s a very well run business (PRO)
There are attractive supply and demand dynamics at play (PRO)
It has government support (PRO)
The valuation is very low (PRO)
COVID-19 challenges (CON)
Operators in trouble (CON) Misleading dividend coverage ratios (CON) Medicare and Medicaid pressures (CON) You can read that detailed report here . However, for your reference, we concluded it like this: In our opinion, if you are looking for a safe income investment, Omega is not for you. Rather, if you are a deep contrarian willing to take on very significant risks, then you might consider investing in Omega… But most importantly, before you invest in anything, make sure you know your own personal goals and risk tolerance, and then select only opportunities that meet your specific needs. Disciplined, goal-focused, long-term investing is a winning strategy. Depending on your goals, situation and risk tolerance, Omega is one big-dividend “dumpster dive” that we believe is worth considering. New Residential ( NRZ ), Yield: 8.7% New Residential is another big-dividend “dumpster dive” situation that you may want to consider. (source: YCharts) New […]