The following real estate investment trusts (REITs) all trade below their book value, and each one pays a dividend.
If the Federal Reserve ever makes the pivot back to lowering interest rates, REITs such as these may be of interest to patient investors. While the wait continues for a change in the rate environment, an investor continues to receive a dividend.
That’s the idea, anyway. It may or may not work out that way, but for those interested, here are the REITs:
Medical Properties Trust Inc. MPW is a healthcare facilities real estate investment trust headquartered in Birmingham, Alabama. The company is trading at 88% of its book value and pays a dividend of 8.92%. Market capitalization is $7.67 billion. Although analysts are predicting a much tougher 2023, funds from operations (FFO) this year are up by 36.9. The past five-year FFO growth is up by 5.2%. The short float sits at 15.83%, indicating a lack of confidence by a significant group of traders. If those shorts are forced to cover at some point, a rally could be substantial. In mid-November, Bank of America Securities upgraded Medical Properties Trust from Neutral to Buy and increased the price target from $13 to $16.
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Sachem Capital Corp. SACH is an American Stock Exchange-traded mortgage REIT with a market capitalization of $152 million, making it smaller than most in the sector. It’s available for purchase at a 33% discount from book value. Sachem is paying a dividend of 14.5%, but that high of a yield may be difficult to sustain. The Connecticut-based firm is showing funds from operations this year at a 7.1% increase and past five-year FFO at 9.7%. It is lightly traded with an average daily volume of about 338,000 shares.
New York-based Safehold Inc. SAFE invests in and manages commercial real estate nationwide. The REIT trades at 93% of its book value and pays a dividend of 2.23%. With a market capitalization of $2.04 billion, it’s relatively lightly traded for a NYSE-listed security, with an average daily volume of 350,000 shares. The short float is a concerning 17.1% suggesting disbelief from those in the shorting business. Funds from operations gained this year by 15.4% and the past five-year gain is 30%.
Greenwich, Connecticut-based Starwood Property Trust Inc. STWD is a mortgage REIT now trading at a discount from its book value of 4%. Market capitalization is $6.23 billion, and the company pays a dividend of 9.61%. This year’s funds from operations increased by 31.9% and the past five-year FFO gain is 0.30%. Trading in Starwood is active with an average daily volume of 2.83 million shares.
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