Real Estate Investment Trusts (REITs) typically own
real estate properties such as shopping centers, apartment
complexes, industrial parks, etc.
These are known as “Property REITs. Another category,
“Finance REITs,” invest in loans secured by real estate.
Last year, the pandemic hit
most REITs hard. With many retail stores closed, shopping centers
weren’t collecting rents. Same thing for residential properties
whose tenants were suddenly unemployed.
Now, with the economy on the mend, share prices, at
least for property REITs, are taking off. In a minute, I’ll describe
how to find the strongest players. But first, some things you need
Although they trade like stocks, REITs are different
from regular corporations. They don’t pay federal income taxes if
they distribute at least 90% of their taxable income to
shareholders. Thus, REITs typically pay high dividends.
The bad news is that REIT dividends are mostly taxed
as regular income instead of the lower 15%/20% capital gains rate.
So it’s best to keep REITs in tax-sheltered accounts.
Here’s how to use the free and user-friendly finviz
stock screener to find REITs worth considering.
From the finviz home page (https:finviz.com), select
screener and then “All” to see the available screening filters. Then
use the associated dropdown menus to select search values for the
filters that you want to use. Here’s how to set up my REIT screen.
Define Candidate Universe
Start by using the Country filter to select “USA” to
limit the field to U.S.-based stocks. Then select “Real Estate”
using the Sector filter to pinpoint REITs. Finally, Select “Over 3%”
using the Dividend Yield filter to limit your list to high
Follow Smart Money
Institutional investors are mutual funds, banks, etc.
Specify “Over 60%” for Institutional Ownership and “Positive” for
Institutional Transactions to identify which REITs they liked enough
to add to already big positions.
Along those same lines, specify “Positive” for
Insider Transactions to pinpoint REITs whose company executives and
other insiders recently added to positions.
Then, using the Analyst Recommendations filter,
specify “Buy or Better” to limit you list to REITs that stock
analysts, who are supposed to know about such things, are advising
Make the Trend Your Friend
Even for REITs, those with already uptrending share
prices are your best bets. Most players use moving averages (average
closing price) to determine which way a stock is trending. Stocks
trading above their moving averages are said to be uptrending and
vice-versa. Use the 200-Day Simple Moving average filter and specify
“Price Above SMA.
Found Five REITs
My screen turned up five REITs when I ran it last
• Armada Hoffler
retail, and multifamily properties located primarily in the
Mid-Atlantic and Southeastern states. 4.5% dividend yield.
• Global Medical REIT
(GMRE): Owns specialized healthcare facilities that it leases to
healthcare systems and medical groups. 5.9% yield.
(NTST): Owns single-tenant retail properties nationwide. 3.8%
• Alpine Income Property
Trust (PINE): Owns single-tenant commercial properties. 5.6%
• Simon Property Group
(SPG): Owns shopping centers and outlet centers in the U.S., Canada,
Europe and Asia. 4.3% yield.
As always, those are my ideas. Do you own due
diligence. The more you know about your stocks, the better your