The Best REIT to Buy Now Pays a 7% Dividend and Could Jump 45%

If you want to make money like the ultra-rich, you need to invest in real estate.

This asset class consistently outperforms the market and provides investors with steady cash flow, price appreciation, and peace of mind.

One of the best ways that ordinary investors who can't afford fancy hedge funds can tap into real estate is to own Real Estate Investment Trusts - or REITs.

Historically, this asset class outperforms in choppy markets (except a one-off event tied to real estate credit in 2008). However, in 1987, the 1990s, and the face of the dot-com bust, REITs delivered positive returns.

Since 1980, REITs have generated annualized returns of 11.61%, compared to just 8.39% for the S&P 500.

That might not seem eye-popping at first, but think about this... if you invested $10,000 in both back in 1980, you'd have $213,594 from the S&P 500 and $649,707 from REITs (more than three times the return).

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It's also worth noting that REITs are typically undervalued against their net asset value, meaning they trade for less than their intrinsic worth. Whether this is due to misunderstandings by traditional investors or an unexplained phenomenon, it presents one of the rare opportunities to buy something for $.80 on the dollar.

Picking the best REIT to buy can be challenging. But that's where our proprietary Money Morning Stock VQScore™ gives us an edge...

You see, this algorithm tracks hundreds of REITs and assigns them a score from 1 to 4.9. The higher the score, the more likely this REIT will break out soon.

Today, we're discussing a REIT with a 4.9 VQScore that owns and operates a global collection of first-class real estate assets.

Its shares trade at two-thirds management's proclaimed net-asset-value, and it has one of the most experienced management teams in the industry.

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Here's the Best REIT to Buy in August

The top REIT to own now is Brookfield Property REIT Inc. (NASDAQ: BPR).

This world-class firm operates under the banner of Brookfield Property Partners LP (NASDAQ: BPY), one of the premier global investors in commercial property.

This is important because Brookfield has a distinct advantage over other REITs through its unique ownership structure.

What makes BPR unique is that these shares provide their investors with the financial equivalence of BPY stock - only they are structured as a REIT.

REITs have special tax status as at least 90% of the income is passed through to shareholders as dividends. BPR shares can also be exchanged for shares of Brookfield Property Partners on a 1-to-1 scale.

And that's excellent news given the reputation and success of Brookfield Property Partners.

Brookfield has access to deep-pocketed, institutional investors who flock to real estate as an income-generating asset in good times and bad. Given recent rate cuts and the flight to safety in areas like real estate, Brookfield will likely be a big winner in the months ahead.

There's a reason why this is a best-in-class company supported by big institutions like the Royal Bank of Canada and Fidelity Institutional Asset Management...

Brookfield is notorious for its ability to leverage private equity real estate funds that operate value-added properties and generate significant cash flow.

Annual returns for those sorts of funds routinely fall in the neighborhood of 20% per year.

They generate these returns because they have a portfolio of world-class real estate assets. These premier properties are largely immune from economic downturns, operated in major regions of political and economic influence, and are highly sought-after properties that could easily be sold at a premium if the company needed to generate cash.

Through both joint and solo ventures, the Brookfield Property operates 125 premier U.S. retail properties with about 121 million square feet of total leasable area.

A few of its premier properties include 85 Fifth Avenue and 530 Fifth Avenue in Manhattan, 605 North Michigan Avenue in Chicago, and the Augusta Mall in Georgia.

But it also has a very strong international presence. At the end of 2018, roughly 27% of its portfolio - or more than $46 billion - was invested in properties around the world.

Digging into the Numbers

Of course, its street address isn't as valuable as its VQScore.

Its VQScore sits at 4.9, indicating the pick is a "Strong Buy" right now.

The number suggests that the stock is ready to break out as investors seek safety and value in real estate assets.

Back in May, management said that the net asset value of its portfolio was $29 per unit of BPY stock (remember, BPR and BPY are interchangeable).

If that's the case, BPR is trading at a 65% discount to its net asset value.

All the while, the Brookfield Property REIT pays a healthy 7.04% dividend. That's significantly greater than the 1.88% yield you'd get owning the S&P 500. And it absolutely crushes the 10-Year Treasury's measly 1.65% annual yield.

The more important thing is that BPR has significant upside, given its commitment to premier properties that attract high-end anchor stores and considerable foot traffic.

BPR could hit $27 per share in the next 12 months, which represents an upside of 45%. The combination of its dividend, discount to NAV, and upside is too hard to pass up for many investors in today's rate environment.

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