Top Three Real Estate Investment Trusts (REITs) Worth Investing in During November

Top Three Real Estate Investment Trusts (REITs) Worth Investing in During November

Investment trusts specializing in real estate (REITs) offer income distribution to investors in a tax-friendly manner. However, all REITs are not equal, and their characteristics can significantly differ. In November, those seeking a high yield might find interest in W. P. Carey (WPC 0.56%), while dividend growth enthusiasts may benefit from exploring Rexford Industrial Realty (REXR -0.91%). Investors prioritizing dividend reliability may want to consider Federal Realty Investment Trust (FRT 1.00%). Here's a concise overview of these attractive, dividend-paying REITs.

1. W. P. Carey steadies the ship

It's undeniable; W. P. Carey made the difficult decision to slash its dividend at the beginning of 2024. The reasoning behind this move was the company's decision to exit the office sector, which accounted for 16% of its rental portfolio. While this was a tough choice, considering the office sector's current downturn, it might have been the best course of action for the REIT and its investors in the long run. Regardless, the market was disappointed, and W. P. Carey has an uphill battle to rebuild the trust it had lost.

One consequence of this decision is an appealing 6.3% dividend yield. It's worth noting that the dividend bounced back to its former quarterly growth trajectory, suggesting that the cut served as a mere reset. This analysis makes sense considering that the REIT is actively operating in multiple property sectors, such as warehouses, industrial spaces, and retail outlets, across several geographic areas (mainly in the US and Europe). Given enough time, it seems plausible that W. P. Carey will regain its footing and prove that this tough move was a wise decision.

2. Rexford Industrial sets its sights on the golden opportunity

First, understand that Rexford Industrial has racked up a jaw-dropping 13.5% annualized dividend growth rate over the past decade. Although the yield is relatively modest at 3.9%, the combination of dividend growth and the REIT's strong story will surely be compelling for a specific group of investors. That growth rate far outpaces historical inflation rates by a substantial margin - nearly 4 times! This REIT has effectively strengthened the spending power of its investors’ dividends over time.

However, there's a catch: Rexford focuses its investments on just one geographic region, Southern California. Although this may sound risky, Southern California boasts one of the largest industrial markets globally, exhibits a supply constraint, and maintains strong demand due to its role as a gateway between Asia and the US. Though Rexford owns only around 3-4% of the properties in this market, it can capitalize on rising rents and ongoing investments in the region. Fans of dividend growth stocks will be eager to learn more about Rexford's fascinating story.

3. Federal Realty reigns supreme as the REIT monarch

For those nearing retirement and relying on dividends from their portfolios, high yields and growth-oriented REITs might not suit your needs. Instead, you might prioritize the reliability of dividends over other factors. That's where Federal Realty comes into play, with a record-breaking 57 consecutive annual dividend increases and its distinction as a Dividend King. Although the yield isn't particularly high (around 4%), if dividend reliability is your top priority, this REIT could be a stellar addition to your portfolio.

Interestingly, Federal Realty has achieved this remarkable streak through an unconventional strategy. It concentrates on quality, rather than quantity, with a portfolio containing around 100 properties. While these properties may not be numerous, they are truly prime locations and highly desirable. The REIT is renowned for its redevelopment and active portfolio management, ensuring that its business continues to grow and evolve over time. If you appreciate a good night's sleep and a steady stream of dividend income, Federal Realty could be an excellent choice.

Variety is the spice of REIT life

Investors often overlook sectors, such as REITs, as a single entity. However, REITs offer a variety of unique options for those willing to venture beneath the surface. In the REIT market, you can opt for a high yield with low risk from W. P. Carey, enjoy a substantial dividend growth rate from Rexford, or build a reliable income stream with Federal Realty. Any of these choices could potentially make an excellent addition to your dividend portfolio in November.

1. Despite experiencing a dividend cut early in 2024, W. P. Carey's 6.3% dividend yield has since steadily rebounded, making it an appealing option for investors looking to allocate money in the realm of real estate investing, finance, and dividend-paying stocks.
2. Rexford Industrial Realty's 13.5% annualized dividend growth rate over the past decade has significantly outpaced historical inflation rates, making it an attractive choice for investors focusing on long-term growth in their finance and dividend portfolios.

Read also: