“Final Four” is a buzzword, and will signal maximum excitement for fans of the NCAA Men’s Division 1 Basketball Tournament, when we see which teams win games among the “Elite Eight” on March 26. But if you’re an income-seeking investor who doesn’t want to risk dividend cuts during periods of prolonged market volatility and a possible recession, a team of Jefferies analysts led by Jonathan Peterson has already narrowed down a group of 76 publicly traded real-estate stocks. has given Investing in trusts for their own “ultimate four”. These are companies with a good record of increasing payouts that Peterson expects to continue to do so over the next three years. A REIT is a company that owns real estate or invests in mortgage-backed securities and distributes at least 90% of its earnings to shareholders as dividends in return for tax benefits. Most dividends received by investors are taxed as ordinary income. There are two broad types of REITs. An equity REIT owns and leases property. A mortgage REIT either acts as a lender, or invests in mortgage-backed securities, or both. Narrowing down the “elite eight” of REITs to the “final four,” Peterson wrote in a March 17 report that among the 76 publicly traded US REITs. Of those that have been in existence for at least 15 years, only 22 have avoided cutting their dividends. He noted that “the list of outstanding dividend payers is not heavily weighted to one subsector,” and added that the key to picking the best performers for the next 15 years “boils down on the quality and sustainability of its current dividend.” For its “elite eight” REITs, Jefferies narrowed the list to companies with a “solid dividend outlook” before narrowing it down to its “final four” that it rates “buy” and is on the firm’s “representative list.” Here are the Jefferies “Elite Eight” REIT stocks, with the “Final Four” in bold and at the top of the list. Each group is classified by current dividend yield. The rightmost column contains Jefferies’ expected compound annual growth rate (CAGR) for dividend payments from 2022 to 2025.
Company
ticker
Concentration
yield of profit
Expected three-year dividend CAGR
National Storage Affiliates Trust
NSA, -0.44% Self Storage 5.25% 4.0%
LXP Industrial Trust
LXP, -1.91% Warehouse & Logistics 5.03% 7.4%
Healthpeak Properties Inc.
Peak, -3.30% Healthcare 5.61% 3.1%
VICI Properties Inc.
VICI, -1.07% Leisure Properties 4.93% 7.2% Gaming and Leisure Properties Inc. GLPI, -0.60% Leisure Properties 5.73% 2.4% Acadia Realty Trust AKR, -4.18% Retail 5.28% 5.9% Realty Income -12% Retail 4.90% 3.0% Kimco Realty Corp. KIM, -3.02% Retail 5.01% 2.7% Source: FactSet Click on the tickers for more about each REIT. If you’re interested in any individual stock, it’s best to do your own research and form your own opinion about how successful the company is likely to be over at least the next decade. Read Tommy Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch Quote page. Don’t miss: 10 US banks that have been the best earners over the past 15 years – are any of them bargain stocks now?
