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REITs are powerhouse investments, providing shareholders with large dividend payouts on top of long-term stock price gains.
Take CoreSite Realty Corp. (NYSE: COR), for example. The stock price not only climbed 43.66% from 2017 to 2018, but it also pays its shareholders a dividend of $3.92 per share.
That's a yield of 3.8%.
Today, we're going to share with Money Morning readers the top REITs to buy in 2018 with gains ahead of them. These will help you capture similar returns, like COR shareholders did last year.
Plus, all three of the REITs we're about to mention have a VQScore™ of 4 right now. So they are all trading far below their fair value.
But before we get to the picks, we wanted to make sure our readers know how REITs work. You see, they don't operate like standard stocks.
The structure allows savvy investors to capitalize on huge dividend payouts and potential long-term stock price climbs…
How Investing in a REIT Works
The average investor doesn't have the capital or time to buy million-dollar properties and rent them out.
Fortunately, you can own a piece of the $30 trillion U.S. real estate market without having to buy, fix, or rent out a property, thanks to REITs.
To qualify as a REIT, a company must distribute at least 90% of its taxable income to shareholders. It must also hold at least 75% percent of total investment assets in real estate and derive at least 75% of gross income from rents or mortgage interest.
And as you will see, REITs are capitalizing on skyrocketing inflation…
Back in the 1940s, it cost just $50 to rent an apartment in New York, according to NY.Curbed.com. Using an inflation calculator, that same $50 from 1940 should have the buying power of $895 today.
That's a staggering 1,690% increase, which is great for landlords.
As REITs generate more money they attract more investors, creating more demand and helping their stock prices climb.
If you don't want to cash out your dividends every quarter, you can use the dividends to buy more shares through a dividend reinvestment program (DRIP).
They pack a double punch of profit opportunities that's hard to find anywhere else.
And the first REIT to buy on our list has a specific strategy that lets it acquire undervalued buildings in up-and-coming communities, which leads to long-term profits.
REIT Stock to Buy 2018, No. 3: CIM Commercial Trust Corp.
CIM Commercial Trust Corp. (NYSE: CMCT) acquires, owns, and operates office properties in the United States.
It has a portfolio of more than 100 buildings that is valued at a combined $25 billion, according to BizJournals.com.
CIM uses an "urban real estate strategy" to identify properties to invest in. It looks for communities located in transitional urban districts, as well as established, thriving urban areas.
And one of its most recent purchases could be a huge revenue source…
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Back in December 2017, CIM paid $180 million for a 356,000-square-foot building in Oakland, Calif., from Uber. Uber paid $123.5 million for the space in 2015, hoping to turn it into an urban campus with 3,000 employees.
But while Uber left the space to consolidate its work force, CIM sees a huge opportunity…
In 2014, Class A (buildings with state of the art systems) totaled $30 per square foot in Oakland. As of December 2017, Class A rent climbed to $50 per square foot.
That's a 66% climb in rent in just three years.
CMCT opened at $15.50 today (March 23), and it pays a $0.50 dividend (3.38% yield).
And the stock price of the next REIT on our list is not only expected to climb 13.99%, but it pays a dividend yield of 3.11%…