Today's Top REIT Pays a 4.2% Dividend and Has 38% Upside

Over the last week, we watched the S&P 500 shed a paltry 2% due to growing concerns about the global economy and the ongoing coronavirus outbreak.

Markets responded the way markets have become trained: Investors expect that the U.S. Federal Reserve will cut rates yet again to support stocks.

The futures market suggested on Friday that it expects the Federal Reserve to slash rates. According to Fed Watch, markets priced in a 60% probability of a rate cut by June 2020.

If interest rates fall yet again, it will be further evidence of the central bank's war on savers. Income investors continue to face incredible odds to sustain their nest egg and can't rely on U.S. bonds as a reliable source of capital.

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To combat this, investors should consider assets that outperform in low-rate environments and can provide massive levels of cash flow to suit their needs.

Our favorite way to play low rates is through real estate investment trusts (REITs).

They provide stable cash flow, a massive tax benefit to juice investor returns, and the appreciation upside from their underlying real estate assets.

Let's discuss one of the best to own this month...

The Top REIT to Own in February

Right now, economic jitters continue to rattle investor sentiment. If you're looking for a safe dividend and a reliable place to generate income, consider the higher-end hospitality industry.

Companies that operate large convention spaces will continue to generate business as industry trade groups, and large organizations fill their hotels and meeting spaces for vital conferences and annual events.

Perhaps no one does it better or maintains a stronger reputation than the operator that we're discussing today.[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]

Ryman Hospitality Properties Inc. (NYSE: RHP) is a hospitality company that operates five large group hotels across the country.

With a 4.2% dividend, it is a REIT that generates its revenue from the gathering of large groups of visitors.

Each hotel in its portfolio has at least 1,400 rooms and 400,000 square feet of meeting space.

Ryman is the owner of the assets to one of the most iconic hospitality names in the industry: the Gaylord brand, which falls under the operations of Marriott International.

Its combined portfolio has 8,114 rooms managed under the Gaylord Hotels brand. Its collection consists of Gaylord Opryland Resort in Nashville, the Gaylord Palms Resort in Kissimmee, Fla.; the Gaylord Texan Resort in Grapevine, Texas; the Gaylord National Resort in National Harbor, Md.; and the Gaylord Rockies Resort in Aurora, Colo.

Gaylord Hotels are known for their "all in one place approach."

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The convention centers have a city feel to them, with luxurious rooms, entertainment events, and unique themes during all times of the year.

For example, the Gaylord Opryland features its own golf course, a massive convention center, a Relache Spa, a 20,000-foot spa and fitness center, nine acres of shopping and dining locations, a flatboat, and plenty of music shows.

Ryman's other assets include:

  • Gaylord Springs Golf Links.
  • The Wildhorse Saloon.
  • The General Jackson Showboat.
  • The Inn at Opryland, a 303-room overflow hotel near Gaylord Opryland.
  • The AC Hotel Washington, D.C., at National Harbor.
  • The Grand Ole Opry - a legendary showcase location for music performers.
  • The former home of the Grand Ole Opry, the Ryman Auditorium.
  • The offices of 650 AM, the Opry's radio station.

The Bottom Line

Ryman Hospitality Group offers a balanced mix of appreciation upside and yield.

Ryman's Gaylord properties have set the trend in the work-play lifestyle at major conference centers.

Although the U.S. economy is in a late-cycle boom, the year ahead looks positive for the company and its assets. Ryman stock currently trades near $87 per share.

We set a price target over the next 12 months at $120 per share. That represents a 38% upside from its current price.

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