The 3 Most Undervalued REITs to Buy in March 2024
Real Estate Investment Trusts (REITs) are companies that own, operate or finance real estate properties. They offer investors the opportunity to gain exposure to the real estate market without the upfront investment of purchasing a property. REITs also typically supply investors with a strong dividend yield. To qualify as REITs, companies legally must return 90% of their taxable income back to investors, most commonly in the form of dividends.
REITs are great long-term investment vehicles because they are an industry that offers some of the highest dividend yields and very stable returns. It isn’t an industry that is extremely volatile. And with REITs that are undervalued, the safety of an investor’s portfolio is even more likely.
Here are some options for REITs that are trading below their value and have the strong potential to provide investors with decent long-term returns.
VICI Properties (VICI)
VICI Properties (NYSE:VICI) is an experiential real estate company that has one of the largest gaming portfolios, which includes many of the hotels and casinos on the Las Vegas Strip, such as Caesars Palace Las Vegas, MGM Grand and Venetian Resort Las Vegas.
Over the past year, VICI Properties has seen its share price fall by 7%. On Feb. 22, it reported fourth quarter full-year earnings results, which stated that total revenue increased by 21% and net income rose by 24% compared to the previous year.
VICI offers a dividend yield of approximately 5.60% on an annual basis, which has increased for five consecutive years. Its most recent dividend, which was announced on Apr. 4, will be paid out to investors for forty-two cents per share.
VICI is a strong company that owns some of the country’s most important real estate, including the majority of the Las Vegas Strip. VICI deployed capital each month, which helps them make various acquisitions and other investments. VICI properties is a must for anybody looking for a solid, undervalued REIT.
Innovative Industrial Properties (IIPR)
Innovative Industrial Properties (NYSE:IIPR) is one of two stocks trading on the stock market that own and operate facilities for the regulated cannabis industry in 19 states. It has just over 100 properties.
Over this past year, its stock price has seen some impressive returns in which it has increased by 20%. This has been due to a recent earnings report beating analysts estimates and IIPR also raised its dividend.
On Feb. 26, IIPR reported earnings for the fourth quarter and full year 2023, and it stated that total revenue increased by 12% and net income remained practically unchanged.
Innovative Industrial Properties has had issues in the past with delinquent tenants, but in the fourth quarter, 100% of rent payments were collected, whereas in Q3 2023, only 97% was collected.
IIPR also offers a strong dividend yield of approximately 7.44% on an annual basis. It is a company that has seen substantial growth lately. With its issue of tenants not paying rent, hopefully, in the rearview mirror, it offers a unique buying opportunity for investors.
Park Hotels & Resorts (PK)
Park Hotels & Resorts (NYSE:PK) has a large portfolio of over 40 hotel and resort properties throughout the U.S.
On Feb. 27, Park Hotels reported earnings for the fourth-quarter and full year of 2023, stating that total revenue increased by 5% and net income increased by over five-fold year-over-year. It also announced that it raised its dividend by over 60% to twenty-five cents per share. Now, it offers a dividend yield of 6.28% on an annual basis.
Within the last six months, PK has seen an increase in its share price of 32% due to multiple positive earnings reports and its dividend increase.
Park Hotels & Resorts is a solid REIT that offers a substantial upside for investors. It has experienced revenue growth in multiple markets, including Boston, Denver and New York, which all saw double-digit increases compared to the year before. PK is a great option for investors who are on the hunt for a REIT that has seen impressive share price appreciation but is still relatively undervalued.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
