What is the secret of the world's wealthiest investors?
Real estate.
It's the cornerstone of every major investor whose name appears in the media...
As we speak, Money Morning Special Situation Strategist Tim Melvin is in New York City, mingling among the top real estate investors in the world at the annual NYU REIT Symposium.
REITs have historically provided investors with high, steady dividends by generating income from working real estate assets.
You can buy REITs that make money from office buildings and hospitals. You can even purchase cash-churning REITs that own a conglomerate of cell phone towers.
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These alternative investments can outperform in any market. And best of all, they provide distinct tax advantages that you rarely find anywhere else...
Over 80 million Americans invest in REITs through mutual funds and exchange-traded funds, often linked to retirement accounts constructed by portfolio managers.
But here at Money Morning, we want to help you take control of your own investments with the single best tool to identify the top REITs to buy right now.
That tool is our proprietary Money Morning Stock VQScore™.
This system tracks the most profitable REITs in the public markets and assigns each a score. That score tells you whether to buy, hold, or a sell an investment.
Most importantly, it shows you which REITs are poised to break out in the coming months.
Today, we highlight the three best REITs to buy based on their VQScores.
Best REITs to Buy, No. 3
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InfraREIT Inc. (NYSE: HIFR) might be your traditional REIT, but hear us out...
This company owns and leases rate-regulated electric transmission assets in Texas and across the Southwest.
Its primary customer is Sharyland Utilities, a firm founded by the famous Hunt family more than 20 years ago.
InfraREIT is one of a kind in that it's the first to dedicate itself entirely to power lines and cell phone towers, which are some serious cash-generating assets.
InfraREIT trades at $21 per share, which is about 10% below its 52-week high.
Its dividend of 4.76% is more than double the average S&P 500 company.
But paramount to all that, InfraREIT's VQScore of 4.75 signals that this is a rock-solid buy and a reliable alternative investment in a time when markets are showing concerns about slowing global growth on lower corporate earnings from last year.
Best REITs to Buy, No. 2
The famous Warren Buffett adage goes that you should be fearful when others are greedy and greedy when others are fearful... which is exactly what brings us to Urban Edge Properties (NYSE: UE).
The firm specializes in shopping centers and was a spin-off from luxury retail giant Vornado Realty Trust (NYSE: VNO) in 2015.
Shares of Urban Edge have pulled back from February highs of $20.73 as concerns about corporate strategy rattled investors.
However, institutional investors have piled in during recent trading sessions after the company released its annual shareholder letter during the last week of March.
Urban Edge focuses its portfolio in the Manhattan area. With an average of 164,000 people living within a three-mile radius of its properties, that's 66% higher than the average of its peers.
New York City and the Northern New Jersey market are one of the most supply-constrained real estate markets in the world. And UE's redevelopment projects emphasize highly trafficked areas in these regions, with shopping malls that average over 20 acres each.
The company plans to invest upwards of $250 million to $500 million in 21 different properties in the next few years. It expects to divest a non-core portfolio of 39 smaller assets that could net the firm $400 million.
As it sheds its assets, the firm aims to see a steady stream of rent replacement for retailers that went bankrupt in recent years. The company expects this revenue to begin pouring in later this year and stabilize by 2021.
Urban Edge pays a nice dividend of 4.61%. However, investors may soon see a boost to both the yield and its share price as management seeks to return more money to investors after it completes its investments.
We expect UE shares to rebound back to 2018 highs of nearly $25 thanks to its strong 4.75 VQScore.
That figure represents upside of 31% from Wednesday's closing price.
Best REITs to Buy, No. 1
RLJ Lodging Trust (NYSE: RLJ) is a diversified REIT that operates premium hotels in 26 states and the District of Columbia.
Its 152 hotels run under the Hyatt, Hilton, Marriott, Embassy Suites, and Wyndham brands. These premium properties consistently have higher-than-average occupancy rates and wider margins for investors to sink their fat dividend-collecting teeth into...
Shares of RJL have dipped in recent months due to concerns about the broader U.S. economy - particularly in the wake of weakening job numbers. However, in the face of broader economic uncertainty, higher-class hotels can perform much better than their cheaper, less-known alternatives.
That's important because Wall Street is allowing this outstanding REIT trade at a steep discount to its peers...
RJL's price-to-sales ratio is 3.43, compared to the sector average of 5.74.
Its price-to-cash-flow of 13.1 is almost half of the industry average of 23.39.
And trading at a price-to-book value of 1.24 means that it's less than 54% of the sector average of 2.72.
This REIT will pay you a yearly dividend of 7.3%, which can mean huge gains if you use dividend reinvestment as a tool to bolster your returns.
But thanks to one of our top VQScores of 4.75, you can tap into that rock-solid yield while also experiencing solid appreciation in share price throughout 2019.
RLJ trades at $18.50 per share. However, should the U.S. economy get a jolt due to a trade deal with China, RLJ shares could surpass their 2017 and 2018 highs and pass $27 per share.
That means an extra 46% gain for you from Wednesday's closing price.
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