As the national average for the 30-year fixed mortgage rate sits at roughly 6.43%, many homebuyers can no longer afford a down payment as well as the interest rate that comes with purchasing a home. Unfortunately, due to the scorching hot real estate market, the average home price in the U.S. is roughly $356,054, causing rents to surge by 12.3%, at the end of August.
With the typical rental charging $2,090 a month, real estate investment trusts in the apartment and single-family rental home market will continue to have an edge on inflation.
These three apartment-and-single-family rental home REITs could prove to be cash generators over the coming years as the housing market is in a bit of a supply crunch.
AvalonBay Communities Inc. AVB is offering a dividend yield of 3.46% or $6.36 per share annually, through quarterly payments, with an inconsistent track record of increasing its dividends. AvalonBay Communities focuses on owning large, high-quality properties in major metropolitan areas that include the Pacific Northwest, New England, and New York. The company owns a portfolio of 299 apartment communities with over 89,037 units in 12 states and is developing 19 additional properties, as of 2022.
AvalonBay has seen 5% annualized dividend growth since its IPO and is the twelfth largest publicly traded REIT.
Essex Property Trust Inc. ESS is offering a dividend yield of 3.65% or $8.80 per share annually, utilizing quarterly payments, with an aristocratic track record of increasing its dividends for 27 consecutive years. Essex Property Trust focuses on owning large, high-quality properties on the West Coast in the urban and suburban submarkets with a total portfolio of 253 apartment communities with over 62,000 units and is developing three additional properties with 571 units, as of 2022.
In the second quarter of 2022, Essex Property repurchased 218,960 shares of its common stock totaling $60.8 million, including commissions, at an average price of $277.81 per share. As of June 30, 2022, the company had $153.6 million of purchase authority remaining under the stock repurchase plan.
Invitation Homes Inc. INVH is offering a dividend yield of 2.59% or 88 cents per share annually, making quarterly payments, with a decent track record of increasing its dividends for four years. Invitation Homes' portfolio is spread across 16 target markets that feature high employment and household formation growth, with nearly 70% of the portfolio in the Western U.S. and Florida.
Invitation Homes owns a portfolio of over 82,000 single-family rental homes and counting as of 2022, and focuses on owning homes in the starter and move-up segments of the housing market with an average sale price of around $300,000 and generally less than 1,800 square feet.
Invitation Homes total revenues increased 13.4% to $557 million year-over-year, while property operating and maintenance costs increased 8.7% to $191 million, and net income per diluted common share increased 71.2% to $0.18.
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