Start the conversation
The Dow Jones Industrial Average is up 7.8% for the month as we receive more encouraging progress on COVID-19 treatments. The U.S. Federal Reserve has also been doing its part to shield the markets from crashing.
But that doesn't mean some segments of the real estate market haven't changed forever. Today, we're going to show you what are still the best high-yield REITs to buy now - the ones that have kept their head above water.
Our top REIT has a yield of 14% right now...
Retail properties are never going to see the same demand as before the pandemic hit the United States. Lower-end properties were already struggling, and the coronavirus has probably ended their existence.
Big city office space is also going to see drastic changes going forward. Work from home has been an enormous success for many companies. And they are rethinking their need for office space. The combination of the pandemic and civil unrest has many companies considering exactly where they want to be in the future. An exodus from once-hot cities like New York, Seattle, and San Francisco is a genuine possibility.
For REIT investors, all this means is that they must pay attention to what sector of the REIT market they are investing in right now. Mall REITs are not the best choice. And REITs that focus on large urban office markets are probably not the best choice either
Try this REIT instead for a 6% yield...
Industrial REITs Are the Future
Warehouse and shipping space will be needed for e-commerce and shipping companies. This coincides with the slow death of brick-and-mortar retail. More of the things we buy will be delivered right to our door in the future.
Industrial Logistics Properties Trust (NASDAQ: ILPT) is going to benefit from increased demand in industrial real estate. It's a real estate investment trust that owns industrial and logistics properties throughout the United States.
Industrial Logistics owns 301 industrial and logistics properties with 43.8 million rentable square feet. The properties are approximately 98.9% leased to 267 different tenants. The weighted average remaining lease term is about 9.6 years. And 40% of the income generated from these companies comes for the continental United States. Industrial properties in Hawaii generate the remaining 40%.
This company's largest tenants include Amazon.com Inc. (NASDAQ: AMZN), FedEx Corp. (NYSE: FDX), and United Parcel Service Inc. (NYSE: UPS), which all will benefit from increased e-commerce activity. Safeway and BJ's Wholesale Club Holdings Inc. (NYSE: BJ) are large tenants for warehouse space, and the grocery business is not going anywhere anytime soon. In fact, it is one of the few retail businesses that has seen strong sales during the current crisis.
Industrial Logistics is yielding 6.32% at the current price. It has huge total return potential as increased demand for warehouse and shipping space will keep demand high. That will result in high occupancy rates and rising rents for their properties in the future.
But you could enjoy a 14% yield with this next top REIT...
The Best REIT Right Now
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
REITs that lease space to government agencies will also see growing cash flows. While the subject of for-profit prisons can be controversial, owning properties that rent these facilities to state and local governments can be profitable.
GEO Group Inc. (NYSE: GEO) has 126 facilities totaling approximately 94,000 beds that are leased to government agencies for the incarceration of prisoners and detainees.
The stock was hit hard in the past year, dropping more than 40% over the last 12 months. That is not a statement about the prosperity of the business, as governments are paying the bills on time as always. The sector is not very popular, but for investors, this represents a real opportunity for enormous profits.
Insiders have been aggressive buyers of the stock since the pandemic began. The CEO has spent more than $10 million of his own money buying stock in the open market over the last few months.
The yield is an eye-popping 14% right now. Some think the payout may be reduced to conserve cash. But even if they cut it by half, you are still collecting 7% in a word where yield is hard to find.
Cautious investors might want to buy a half position at current prices. They can then double down if and when they cut the payout.
Action to Take: Many REITs will struggle in a real estate landscape forever changed by the pandemic. But a few will make it through the storm. The winners today are industrial REITs that serve e-commerce companies and REITs that house government agencies. GEO Group Inc. (NYSE: GEO) pays a 14% dividend yield right now. You can pick up shares for just $12.13 today. The stock also has 75% upside potential to a 12-month target of $21.
5G Was Following in the Footsteps of 4G Until the FCC Stepped In
By now, you've heard the 5G story a million times over. You've seen the billboards, you've seen the commercials, and you've seen the hype campaigns.
But there's a key reason why there hasn't been a nationwide rollout yet.
It was following in the footsteps of the 10 years it took 4G to roll out... but the FCC just stepped in with a $10 billion initiative to supercharge 5G.
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.