With market uncertainty weighing on investor sentiment, market participants may want to concentrate on high-potential real estate investment trusts or REITs to buy. Primarily, this financial vehicle attracts buyers due to their typically strong yields. That’s because legal frameworks require REITs to pay 90% of their annual income as shareholder dividends.
Another advantage to REITs to buy is that the ecosystem itself offers diverse opportunities. With individual REITs specializing in multiple areas of the real estate industry, you’re sure to find something that suits your tastes and objectives. As the rest of the market sways due to myriad uncertainties, such diversity may command a premium.
Of course, REITs like any other investment category have their risks. That’s why for this list, it’s not just about the yield. Rather, every one of these market ideas feature analyst consensus price targets implying double-digit returns. With that, here are the REITs to buy for March.
|AIRC||Apartment Income REIT||$36.60|
|PINE||Alpine Income Property||$17.55|
|PDM||Piedmont Office Realty||$8.69|
Based in Spokane, Washington, PotlatchDeltic (NASDAQ:PCH) manufactures and sells lumber, panels and particleboard. As well, the company receives revenue from other assets such as mineral rights and the leasing of land. Since the Jan. opener, PCH gained over 8% of equity value. However, in the trailing year, it slipped more than 11%.
Still, in part of the market volatility, PCH could make for an undervalued opportunity among REITs to buy. In addition, the market prices PCH at a trailing multiple of 10. As a discount to earnings, PotlatchDeltic ranks better than 62.83% of other REITs. Operationally, it enjoys an outstanding three-year revenue growth rate of 14.3%. Currently, PotlatchDeltic carries a forward yield of 3.79%. However, investors should note that its payout ratio is lofty at 96.23%.
Finally, Wall Street analysts peg PCH as a consensus moderate buy. Further, their average price target stands at $53, implying over 11% upside potential. Thus, it’s well worth consideration for REITs to buy.
Apartment Income REIT (AIRC)
Focused on its namesake residential complexes, Apartment Income REIT (NYSE:AIRC) owned 27 apartment communities as of the end of 2020. This tally consists of 6,342 units in 12 states and the District of Columbia. Since the Jan. opener, AIRC gained over 10% of equity value. However, in the past 365 days, it cratered 29%.
Naturally, questions about interest rate hikes cloud the narrative for the broader residential property ecosystem. Still, people need somewhere to live, affording Apartment Income REIT critical relevance. Moreover, AIRC offers some attractive fiscal attributes. For example, the market prices AIRC at a trailing multiple of 6.43. In contrast, the sector median value pings at a lofty 13.81.
According to data from TipRanks, AIRC features a dividend yield of 4.71%. As well, its payout ratio sits at 30.81%, a confidence-inspiring figure. Lastly, covering analysts peg AIRC as a consensus moderate buy. Moreover, their average price target stands at $41.86, implying nearly 12% upside potential. Therefore, it’s one of the REITs to buy for solid yield and capital gains possibilities.
Starwood Property Trust (STWD)
Based in Connecticut, Starwood Property Trust (NYSE:STWD) is a private investment firm with a primary focus on global real estate. Per its website, its assets under management combine for a valuation of approximately $120 billion. Since the beginning of the new year, STWD gained 6% of equity value. In the trailing one-year period, though, it dipped more than 14%.
It’s possible that we could be looking at an underrated opportunity among REITs to buy. Presently, the market prices STWD at a trailing multiple of 7.17. As a discount to earnings, Starwood ranks better than 72.37% of the competition. In addition, STWD trades at 9.14-times forward earnings. Here, the company ranks better than 82.75% of the industry.
At the moment, Starwood carries a forward yield of 9.77%. Still, investors should note the rather toasty payout ratio of 88.95%. Ultimately, investors may dive into STWD because of strong analyst support, with experts rating it a strong buy. Also, their average price target stands at $22.25, implying over 13% upside potential.
Ladder Capital (LADR)
An internally managed commercial REIT, Ladder Capital (NYSE:LADR) features $6 billion of assets as of the end of last year. Per its website, Ladder is one of the nation’s leading commercial real estate capital providers. It specializes in underwriting commercial properties and offering flexible capital solutions. Since the Jan. opener, LADR gained 6% of equity value. However, in the past 365 days, it dipped 5%.
In the spirit of transparency, Gurufocus.com warns that Ladder may be a possible value trap. Objectively, the market prices LADR at a trailing multiple of 9.51. In contrast, the sector median value is 13.81. Also, shares trade hands at 4.05-times trailing sales. As a discount to revenue, Ladder ranks better than 74.59% of the field.
Notably, the company carries a forward yield of 8.49%. This ranks much higher than the financial sector’s average yield of 3.18%. To be sure, the payout ratio is elevated at 71.88%. Still, it’s not the highest ratio among REITs to buy. Lastly, Wall Street analysts peg LADR as a consensus moderate buy. Their average price target stands at $12.75, implying nearly 18% upside potential.
Alpine Income Property Trust (PINE)
Based in Winter Park, Florida, Alpine Income Property Trust (NYSE:PINE) is a commercial property REIT, primarily specializing in the consumer retail segment. Under its portfolio, the company features several top brands, including leading big-box retailers, pharmacies and discount dollar stores. Since the beginning of the year, PINE dipped 7%.
Fundamentally, the volatility may be explained through concerns about the consumer economy. Nevertheless, people will still need to acquire various discretionary and critical goods. Therefore, Alpine offers a diversified approach rather than targeting the brands individually. For risk takers, the market prices PINE at a trailing multiple of 8.2. As a discount to earnings, Alpine ranks better than 68.75% of the competition.
Currently, the company carries a forward yield of 6.18%. That’s notably above the real estate sector’s average yield of 4.86%. Turning to Wall Street, analysts peg PINE as a consensus strong buy. Their average price target stands at $22.05, implying 24% upside potential. With high yields and high capital gains potential, PINE’s one of the REITs to buy.
Piedmont Office Realty Trust (PDM)
Headquartered in Atlanta, Georgia, Piedmont Office Realty Trust (NYSE:PDM) is a self-administered and self-managed REIT. It’s also one of the nation’s largest publicly traded owners of Class A office properties. Since the January opener, PDM gained 3% of equity value. However, it ranks among the riskiest REITs to buy, slipping almost 47% in the trailing year.
Of course, given the immense volatility, PDM may only be appropriate for the hardcore contrarian. Indeed, Gurufocus.com warns that it’s as possible value trap. By the numbers, the market prices PDM at a trailing multiple of 7.63. As a discount to earnings, Piedmont Office ranks better than 71.22% of sector peers. As well, it trades at a subterranean trailing book value of 0.61.
At the moment, Piedmont carries a forward yield of 9.25%. That’s obviously well higher than the real estate sector’s average yield. However, investors should watch out for sustainability risks. What could sway those on the fence may be analyst support. Right now, experts forecast an average price target of $13, implying over 43% upside potential.
AFC Gamma (AFCG)
Headquartered in West Palm Beach, Florida, AFC Gamma (NASDAQ:AFCG) bills itself as an institutional lender to the commercial real estate sector. The firm leverages its time-tested core competencies in private lending and real estate. However, it’s one of the riskiest REITs to buy, declining nearly 9% of equity value since the beginning of 2023. In addition, it shed almost 27% in the past 365 days.
Still, for those that want to take a wager, AFCG could be intriguing. Currently, the market prices shares at a trailing multiple of 6.83. As a discount to earnings, AFC ranks better than 72% of the competition. Also, it trades at a forward multiple of 7. In contrast, the sector median value pings at 15.87 times. According to TipRanks, AFC Gamma features a staggeringly high dividend yield of 14.48%. Interestingly, its payout ratio is 73.48%, which is perhaps reasonable for such a generous yield. Lastly, Wall Street analysts peg AFCG as a consensus strong buy. Moreover, their average price target stands at $21.13, implying nearly 49% upside potential.
On the date of publication, Josh Enomoto did not have (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.