I would like to introduce American REITs, which are of high interest in Korea as dividend investments. The results were selected based on basic and quantitative analysis results and mainly referenced data from Seeking Alpha and Yahoo Finance.
(Source: Realty Income)
Realty Income Corporation (NYSE: O)
Summary: Realty Income, dividend rate 5.9%, do I need further explanation?
It can be said to be the undisputed number one REIT loved by Koreans. Realty Income is a representative dividend stock known for its monthly dividend payments, and has maintained stable cash flow and growth over a long period of time. It mainly invests in commercial real estate. Main investment targets include retailers, convenience stores, drug stores, and restaurants in the U.S. and Europe. It pays dividends every month and has continuously increased dividends over the past 25 years. The current dividend yield is a whopping 5.89%. As of the first quarter of 2024, $598 million has been invested with a yield of approximately 7.8%, and the stability of the portfolio is being maximized through geographic and industrial diversification. Unfortunately, recent long-term performance reflecting stock price fluctuations is below the REIT average. However, considering the credibility of this stock, which has shown continuous dividend increases for 25 years, and the dividend payout of close to 6%, it is believed that it is possible to put aside stock price fluctuations and invest with the mindset of a monthly rent investor.
(Source: Host Hotel & Resort,JW Marriott, Hyatt)
Host Hotels & Resorts (NYSE: HST)
Summary: Investment in resort pre-sale rights? For 18 months, you can invest in Marriott and Hyatt.
Host Hotels & Resorts is the largest hotel REIT in the United States. The main sources of revenue are by far Marriott and Hyatt hotels, accounting for approximately 60% and 21% of total revenue. It owns various hotels, including the Ritz-Carlton and Four Seasons. Despite being a REIT stock and despite concerns about inflation and recession due to the nature of luxury stocks, it recorded a growth rate of 4.8% in sales in the fourth quarter of 2023, reaching $1.32 billion, an increase from the previous year. The AFFO payment ratio is at a good level of 37%, and the debt ratio is stable at 42%. Key competitors include Park Hotels & Resorts and Pebblebrook Hotel Trust, while the rise of services such as Airbnb is also a point to check.
(Source: One Liberty Properties)
One Liberty Properties (NYSE: OLP)
Summary: If you can't become the owner of a Starbucks building, become a shareholder of OLP, which has FedEx as a tenant.
One Liberty Properties is a REIT that primarily focuses on industrial real estate and owns a variety of industrial and retail properties throughout the United States. Major tenants include FedEx, Northern Tool & Equipment, Haverty Furniture, and LA Fitness. By adopting net leases, which require the lessee to bear real estate taxes, insurance, and maintenance costs, risks are relatively alleviated and stable profits are an advantage. The current dividend yield is approximately 7.6%. Although dividends do not increase every year like Realty Income, the stock price is also managed through share buybacks, so the total profit for the past year considering the stock price greatly exceeds Realty Income.
(Source: National Health Investors)
National Health Investors Inc. (NYSE: NHI)
Summary: Healthcare and REITs, if you don’t want to give up either, NHI
National Health Investors Inc. is a healthcare REIT listed on the New York Stock Exchange (NYSE), and its main business areas are senior housing and nursing homes. The company operates a diversified investment portfolio and has a BBB- credit rating and a dividend yield of 5.5%. The company's market value is approximately $3 billion. NHI recorded positive performance in revenue and funds from operations (FFO) in the fourth quarter of 2023. Fourth quarter FFO hit $1.09, 2 cents more than expected. Net operating income (NOI) increased 3.7% during 2023, but this was largely offset by interest expense rising from $12.4 million to $14.8 million, despite lower debt due to rising interest rates. For reference, NHI's debt ratio is 47.33%, which is the industry average. Despite the nature of NHI's business, it is evaluated to have responded relatively well during the pandemic.
(Source: Independence Realty Trust)
Independence Realty Trust (NYSE: IRT)
Summary: Let’s invest in American apartments? Multi-family housing REITs, IRT
Independence Realty Trust is a REIT that maintains and manages multi-family housing in major cities. As of the first quarter of 2024, it owns 111 real estate properties and manages approximately 32,877 households. Its main markets are Atlanta and Dallas, and most of its assets are concentrated in the southern U.S. states (Sunbelt states). During 2024, it outperformed the most popular REIT ETF, the Vanguard Real Estate Index Fund ETF (VNQ). IRT's dividend yield is 4.5%, which is lower than that of other REITs, but its total return considering stock price increases is more than twice the sector average. Despite the interest rate increase, interest expenses actually decreased. However, due to increased operating costs, FFO did not increase compared to the previous year. The real estate occupancy rate is around 95%, and the average interest rate is around 4.2%. Debt maturing in 2024 is around 1% of the total, so there appears to be no risk even if interest rates are maintained for a long period of time.
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