If you're serious about making money, you need to own stocks and other assets tied to real estate.
Unfortunately, too many investors don't have the capital to own a significant amount of property. Or they aren't able to meet the financial thresholds required to invest in private equity firms. In some cases, the minimum to invest can be in the hundreds of thousands - if not millions - of dollars, well outside the reach of ordinary people.
But savvy investors can still tap into a diversified basket of real estate investments for less than $20. These assets capture upside of real estate while also producing cash flows in the form of dividends.
They're called real estate investment trusts, or REITs. And if you find the right REIT, it can make you very wealthy in a short period.
The REIT world is full of niche alternative strategies that can make investors a fortune in a short time. Today, we're going to talk about the companies that control the money behind many of the most exciting real estate investments in the United States.
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We're talking about mortgage REITs - firms that acquire, originate, manage, and finance commercial real estate loans and real estate-related securities. Today, we're unveiling the top mortgage REIT available on the market.
And we'll discuss three reasons why this little REIT - with just a $725 million market capitalization - can make you very rich.
Reason No. 1: the Smart Money Target
The top-performing asset of the last 20 years has been real estate.
Tapping into that trend is difficult unless you're in private equity or other advanced alternative strategies, given the requirement of being an accredited investor.
Now, with the market in a late cycle and interest rates falling, we see a dramatic wave of real estate purchases by alternative investment companies.
We want to jump on and ride this wave by using mortgage REITs.
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And Ready Capital Corp. (NYSE: RC) is the best mortgage REIT to own right now.
The company is an approved Freddie Mac small balance loan lender and an SBA preferred lender. The core of the firm's business operates as a small business concern. Its financial lending focuses on commercial first mortgage loans.
As just one of the 11 SBA approved nonbank lenders in the United States, it has a niche focus and finds itself in very elite territory. The company operates in a fragmented sector. Therefore, its size and scale allow it to bolster its operations in the future.
The firm specializes in real estate investments ranging from $3.5 million to $35 million. It also purchases portfolios of nonperforming loans and improving loans. The company can make money by improving the terms of the loan and ensuring payout from lendees.
Reason No. 2: Cash, Cash, and More Cash
Ongoing worries about falling interest rates have institutional investors scrambling.
That's why more and more investors are turning to dividend stocks as a way to ensure returns in a top-heavy market. Ready Capital stands out from the crowd with a remarkable dividend yield of 9.8%.
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In a world where the 10-year Treasury pays just 1.8%, you could get more than five times the annual cash flow from an investment in Ready Capital.
And with solid cash flow and a rock-solid dividend, it's no surprise that executives own a lot of the company stock.
According to SEC data, it appears that insiders now control 800,000 shares. However, an exclusive partnership among its executives holds more than 12 million shares (or 28% of the company.)
That partnership - Sutherland REIT Holdings - has an incredible amount of accountability to shareholders. If it wants to expand its wealth, it will need to build the wealth of shareholders as well.
The deployment of cash flow in the form of a 9.8% dividend is evidence of that commitment.
Reason No. 3: the Money Morning Stock VQScore
Finally, we mentioned that we had a secret weapon to determine the best REITs to buy ahead of 2020.
We call it the Money Morning Stock VQScore™.
This proprietary system tracks approximately 1,500 of most profitable REITs and stocks on the market every day.
It takes a comprehensive quantitative assessment of every profitable public company. From there, it assigns every stock a score ranging from 1 to 4.9.
The higher the score, the more likely the stock is to break out in months ahead. A stock with a VQScore north of 4 puts it squarely in our "Strong Buy Zone."
Ready Capital currently holds a VQScore of 4.2. That means it's time to buy and ride both the stock and the dividend higher.
The REIT has a one-year price target of $25, a figure that represents a possible upside of 53%.
Combine that market-beating return with a 9.8% dividend, and you have an investment that can earn you a massive windfall in 2020 and beyond.
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.