The 3 Most Undervalued REITs to Buy in June 2024
Undervalued REIT stocks are a solid addition to any investment portfolio. They provide exposure to the real estate industry, which can be very profitable without requiring much capital upfront to invest in properties. REITs also provide investors with outstanding dividend yields because to qualify as real estate investment trusts (REITs), companies must distribute at least 90% of taxable income to investors, primarily in dividends.
Below are a few undervalued REIT stocks that have experienced share price appreciation this past year. They are still trading at a fair valuation, providing investors with potential upside.
Kilroy Realty (KRC)
Kilroy Realty (NYSE:KRC) owns and operates real estate in major metropolitan U.S. locations, including primary office space, mixed-use and life science properties.
Over the past year, its share price has risen by 21% due to its increase in overall occupancy rate and ability to return more capital to investors.
On My 2, Kilroy Realty announced its first quarter earnings results for 2o24, stating that total revenue fell by 5% and net income dropped by 12% year-over-year. During the first quarter, KRC leased over 400,000 square feet of new real estate space, and the occupancy rate has grown to 86%
KRC offers investors a dividend of 6.46% on an annual basis. Its most recent quarterly dividend was fifty-four cents per share, distributed on March 26.
Kilroy Realty is an office REIT that has struggled to maintain a high occupancy rate due to the large movement of remote work that has swept across the country in recent years. But in 2024, it is starting to rebound and providing investors with solid returns.
KRC’s forward P/E ratio is 23.09, while the sector average is 32.36, which still makes it an undervalued stock that has experienced strong returns over the past year.
Host Hotels & Resorts (HST)
Host Hotels & Resorts (NASDAQ:HST) is a large lodging real estate company that owns and operates luxury hotels and resorts. HST owns approximately 77 properties under brands such as Hilton, Four Seasons, Hyatt, Ritz-Carlton and Marriott.
On May 1, Host Hotels released its earnings for the first quarter of 2024, stating that total revenue increased by 7% and net income decreased by 7% compared to the previous year.
Its share price has risen by 5% over the past year. Guidance for the full year 2024 net income is expected to be between $719 million and $775 million. Previous guidance suggested that net income would be between $708 million and $794 million.
It offers a dividend yield of 4.44% on an annual basis. Its recent quarterly dividend was twenty cents per share, distributed on April 15.
HST is an undervalued REIT trading at a forward P/E ratio of 17.13, while the sector average is 32.36. It offers investors a potential upside from an increase in overall travel demand.
NewLake Capital Partners (NLCP)
NewLake Capital Partners (OTC:NLCP) provides real estate locations for cultivation and retail purposes within the regulated cannabis industry.
On May 9, NLCP reported earnings for the first quarter of 2024, stating that total revenue increased by 10% and net income rose by 17% year over year.
Over this past year, its share price has risen by 60% due to its strong revenue growth and the improving environment surrounding the cannabis industry. Back in April, the U.S. DEA reclassified marijuana from a Schedule I to a Schedule III substance, signifying a shift within the regulated cannabis industry.
It offers a strong dividend yield of 8.35% on an annual basis. Its most recent quarterly dividend was forty-one cents per share, distributed in April. 15.
Despite its recent surge in share price, it is still trading at a fair valuation. Its forward P/E ratio is 16.64, while the median sector forward P/E ratio is 32.36.
NLCP is a stock that could see a very bright future. Its impressive share price appreciation and recent overall growth, on top of a shift in marijuana legalization, suggest that it is a solid REIT for investors to be aware of.
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.
