The following real estate investment trusts (REITs) are interesting because each has a balance sheet not so different from those shown in Benjamin Graham’s classic “The Intelligent Investor.” Graham, of course, is considered the father of value investing and was a major influence on his Columbia University student, Warren Buffett.
Each of these REITs trades at a discount to book value, and each pays some form of dividend. Of course, there is much more to consider, but as a starting point for the serious long-term investor, these under-book, dividend-paying REITs may be worth a look.
Annaly Capital Management Inc. (NYSE:NLY) trades at a 1% discount to book value with a price-to-earnings ratio of just 2.42 and currently pays a dividend yield of 14.57%. It is a mortgage fund whose assets primarily consist of broker-backed securities and debt obligations.
The daily stock chart for Annaly CapitaI can be found here:
The price from almost $7.80 at the beginning of the year to $5.30 in mid-June is quite a range. A rebound from June to late July brought the price back to $7, but then the sell-off resumed, taking the REIT back to $6 before some buyers reappeared.
Note: This little-known REIT has posted double-digit annual returns for the past five years
City Office REIT Inc. (NYSE:CIO) trades at a very low price-to-earnings ratio of 1.13 and pays a dividend yield of 6.9%. The company buys and operates office properties primarily in the West and Southwest, including cities such as Denver, Dallas and Phoenix. City Office trades at just 66% of its book value.
Should investors sell immediately? Or is it worth starting with Bykontoret Reit?
The daily price chart for City Office REIT looks like:
Note the drop from $20.50 earlier this year to the current price of $11.63 – a 43% drop in about seven months. The good news for City Office REIT is that the June low of less than $11 has held so far.
Cousins Properties Inc. (NYSE:CUZ) trades at a price/earnings ratio of 14.14 and pays a dividend yield of 4.76%. The company owns, manages and develops rental properties primarily in the southern United States, primarily in Texas and Georgia. The share can be bought at a discount of 13% to book value.
The daily price chart for Cousins Properties looks like:
That’s a plunge from $41 to $26.91 in about 5½ months — a 34% drop in value. The REIT is still flirting with the early September low, which is also the lowest of the year.
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Dynex Capital Inc. (NYSE:DX) trades at 79% of book value, has a price-to-earnings multiple of 3.5, and pays a dividend of 10.5%. The firm invests in residential and commercial mortgage-backed securities, primarily those secured by agencies.
The daily stock chart for Dynex Capital looks like:
This is a large trading range for a real estate investment trust – from just above $13.80 in mid-June to $16.80 in late July before falling to $14.83 in September.
SL Green Realty Corp. (NYSE:SLG) trades at a price-to-earnings ratio of 10.94 and pays investors a dividend yield of 7.95%. The company is one of the largest real estate owners in New York City, having interests in approximately 35 million square feet of real estate in Manhattan. The REIT trades at a 33% discount to book value.
It is The SL Green daily chart:
Note the sharp price drop from the beginning of the year to today. The REIT stock traded at $81 in late March and now trades at $47.87.
There is no guarantee that the dividend yield described in this article will remain as it is. Real estate investment trusts can lower or cut such payments without too much notice.
Looking for high dividend yields without price volatility?
Real estate is one of the most reliable sources of recurring passive income, but publicly traded REITs are just one way to access this high-income asset class. Check the coverage Benzinga’s on real estate in the private market and find more ways to add cash flow to your portfolio without timing the market or succumbing to wild price swings.
Current insight into the private market:
- Arrived Home has expanded its offering to include shares in short-term rental properties with a minimum investment of $100. The platform has already financed over 150 single-family homes valued at over $55 million.
- The flagship property fund of Fundraising is up 7.3% year-to-date and just added a new rental community in Charleston, SC to its portfolio.
Find more news, insights and offers Alternative gasoline investments
No investment advice. For educational purposes only.
Charts: Courtesy of StockCharts
Buy, hold or sell City Office Reit?
How will Bykontor Reit develop now? Is an entry worth it, or should investors rather sell? You can find out the answers to these questions and why you should act now in the current City Office Reit analysis.