Smart investors know that when a solid company is out of favor with Wall Street and its stock has been beaten down, it’s usually just a matter of time before the stock rebounds and the shares begin to sell in more of their usual range.

When REITs are out of favor, their usual 4% or 5% dividend yield can soar to above-average percentages. It takes courage to buy them at these times, but the rewards can be substantial if appreciation occurs, along with the huge dividend yields locked in for the long term.

These three well-known real estate investment trusts (REITs) have been out of favor in 2022, and their dividend yields are now well above their five-year averages.

Simon Property Group Inc. (NYSE:SPG) is an Indianapolis-based retail REIT that owns and leases shopping malls, restaurants, outlet centers and entertainment venues.

Simon Property Group has been a leading retail REIT for decades. Eleven months ago, Simon Property Group was trading at $160. But 2022 has seen a huge sell-off in quality REIT stocks with inflation, interest rate hikes and fears of a recession so predominant. September was particularly rough as Simon Property Group’s stock fell to a low of $86.02. It has since recovered to trade at $95.87.

The annual dividend of $7 per share now yields 7.3%, or 25% above its five-year average of 5.84%. For investors looking for a stable long-term REIT with a huge dividend yield going forward, Simon Property Group could be a winner.

Alexander’s Inc. (NYSE:ALX) is a Paramus, New Jersey-based retail REIT that leases, manages and develops commercial properties in the New York City metropolitan area.

The quarterly dividend of $4.50 was raised from $4.25 in 2018 and has remained stable ever since. There were no cuts nor elimination of the dividend during the COVID-19 pandemic.

The 52-week range for Alexander’s is $205 to $299.99, and its most recent price was near $213.50.

Like Simon Property Group, September was a down month for Alexander’s stock, pushing up the annual dividend of $18 per share to yield 8.43%. With a five-year average yield of 6%, Alexander’s could be a real income bargain at this level.

Vornado Realty Trust (NYSE:VNO) is a New York City-based office REIT that owns and manages nearly 26 million square feet of office buildings in the nation’s largest cities, including New York, Chicago and San Francisco.

Vornado Realty Trust celebrated its 60th year of trading on the New York Stock Exchange in 2022, so it’s clearly a well-established company. Yet spiking interest rates and recessionary fears have brought down its price like so many other REITs this year. The 52-week price range for Vornado Realty Trust is $22.83 to $47.26, and the stock touched its low within the past week.

Vornado Realty Trust has beaten the analysts’ estimates over the past two quarters, and its revenue and earnings per share (EPS) numbers have been improving. But the market only seems to care about Federal Reserve Chair Jerome Powell’s next move or two on interest rates.

Although the five-year average dividend yield is 4.96%, the present yield on the $2.12 annual dividend is an incredible 8.8%. The quarterly dividend was cut from 66 cents to 53 cents in August 2020 but has remained stable since that time. Income investors could be getting quite a bargain at this price.

Related: This Little-Known REIT Has Produced Double-Digit Annual Returns For The Past Five Years

Today's Private Market Insights:

QC Capital launched its latest real estate fund with a target annualized return of 15% to 19%. The fund is targeting value-add opportunities in high-growth markets. 

Palladius Real Estate Fund I, LP is now 91% funded on the RealtyMogul platform. The fund has a target IRR of 17.5%