3 Undervalued REITs With Dividends Above 7%

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

REIT prices have soared over the last year, which has left some investors feeling like they missed out on taking advantage of last year’s low prices. Luckily, there are a handful of high-dividend REITs that have been overlooked and are still priced at a discount. 

Global Net Lease GNL

This diversified REIT owns a portfolio of properties that includes industrial, office and retail across 10 countries. The company has an impressive tenant roster, with 66% having investment-grade credit ratings. 

The REIT focuses on long-term triple net leases, with the company’s remaining weighted average lease term being 8.3 years. This means stable income with high operating margins. 

The company’s stock is trading at a price to FFO multiple of around 10.3x, compared to the sector average of 17.9x. The stock is also priced at a 16% discount to its estimated net asset value (NAV), while some of the more well-known diversified REITs are currently priced at a premium to NAV. 

Factor in the company’s 8.76% dividend yield, and it’s definitely a value play worth looking at. 

American Finance Trust AFIN

This retail REIT owns a growing portfolio of single tenant and multitenant retail and distribution properties across the United States. The company has been taking advantage of opportunistic acquisitions with high purchase cap rates and has several more deals in the pipeline for 2021. 

The majority of the REIT’s portfolio is made up of single-tenant net leased properties, with a high concentration of service-oriented companies. The company also has a remaining weighted average lease term of 8.7 years, with most leases being with investment-grade tenants. 

American Finance Trust’s stock is trading at a price to FFO multiple of around 9.4x compared to the sector average of 16.3x. The stock is also priced at a steep 45% discount to its estimated NAV. 

It’s important to note the company is carrying a hefty amount of debt, leaving it with a net debt to adjusted EBITDA ratio of 8.3x. However, the steep discount to NAV mitigates that added risk — and the 10.24% dividend yield offers some extremely attractive income. 

Omega Healthcare Investors OHI

This health care REIT owns a portfolio of skilled nursing facilities and senior housing properties in the United States and the United Kingdom. Skilled nursing facilities make up the vast majority of the company’s portfolio, which are triple net leased to some of the top skilled nursing operators in the world. 

Omega has grown consistently over the years. The company’s revenue has grown at a rate of 15.7% annually since 2009 and has grown AFFO at an annual rate of 18% over the same period. Considering that demand for long-term care is expected to continue growing for several years, this REIT’s growth is likely to continue as well. 

While Omega’s price to FFO of 11.5x might not seem like a huge discount compared to the sector average of 15.3x, the three largest health care REITs are currently trading at over 20x. 

Omega also has the highest dividend yield among health care REITs at 7.32%. With 17 consecutive years of dividend growth through 2020, this REIT looks like a solid dividend investment at an attractive price.

Want to learn more about investing in REITs? See How to Invest in REITs

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.

Posted In: american finance trustGlobal net leaseomega healthcare investorsStocks to WatchLong IdeasREITTrading IdeasReal Estate