The retail sector might not sound like the most exciting place to invest, but following that myth could cost you.
In fact, one top REIT to buy today pays a 9.1% yield and could be your perfect play for profits.
It's no secret that retail stores are struggling. But there are still plenty of profitable companies adapting to the latest trends. And some of the best REITs to invest in are plugged right into that growth potential.
At the moment, consulting company McKinsey & Co. is going all in on reviving retail stores. In fact, it's opening a "retail lab" at the Mall of America in Minneapolis.
With this, McKinsey is testing various technologies and ideas in pop-up stores to combat online competition.
One example is the inclusion of "smart mirrors." Smart mirrors let buyers try on clothes in different colors and styles without having to change into them.
Major retail companies like Walmart Inc. (NYSE: WMT) have also created their own "retail labs." In Walmart's case, the company is utilizing AI software.
There are also companies like Bed Bath & Beyond Inc. (NASDAQ: BBBY) creating labs to show off potential products and layouts.
For the retail companies that strike the right balance, there could be billions of dollars for the taking.
Combining online and in-person retail stores could give shopping centers the lift they need.
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On top of retail labs, some shopping centers are shifting directions. Now, some are converting their spaces into community areas. These include offices, shared work spaces, health clinics, and even assisted living areas.
That's creating an opportunity for you to cash in on one of the top REITs to buy today. And it pays a 9.1% yield on your investment just for owning it.
Check out one of the best REITs to buy below...
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The Top REIT to Buy Today Pays a 9.1% Yield
Tanger Factory Outlet Centers Inc. (NYSE: SKT) is our favorite shopping mall REIT to buy now.
It is based out of Greensboro, N.C., and it currently owns and operates 39 outlet shopping centers across North America.
Tanger's properties are located in 20 U.S. states as well as Canada. They cover roughly 14.3 million square feet of retail space, with leases to more than 2,800 stores, which are operated by over 500 different brand names.
The firm has over 38 years of experience in the outlet space. Its Tanger Outlet Malls continue to pull in more than 181 million visitors per year.
Sadly, similar to most other retail REITs, the stock has struggled in 2019. So far this year, it is down 24%.
Even with rising numbers of store closings reducing cash flow, the losses aren't staggering.
In fact, it remains to be seen whether its lower cash flow is going to have any impact on the company's dividend.
Currently, that dividend is a robust 9.1%.
Analysts expect Tanger to make $1.34 per share this year before those figures slip to $0.83 per share in 2020.
Granted, this is a big drop in earnings, but there is still plenty of cash on hand to pay dividends.
This is a stock that is now dirt cheap. Its shares are trading at just 11 times the current year's earnings. Investors looking for solid dividend stocks are quickly zeroing in on ones like this.
That sort of buying can often push valuations to 20 times earnings or higher.
Assuming that Tanger makes $0.83 per share in 2020, the stock would trade for 18 times earnings.
It's certainly possible that this is a conservative estimate. Considering that lower interest rates will increase consumer confidence and spur spending, we could see better results. Plus, retail spending goes up as incomes increase.
As McKinsey decodes the new solution for hybrid retail, there could be more stores opening to replace the ones that have closed.
Investing produces the greatest success when the future doesn't look especially bright. As this industry continues to evolve, now is the time to buy.
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