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Investing is like fashion because everything goes in cycles. What was once “yesterday’s news” can easily become next year’s “the” thing. The Federal Reserve has lowered interest rates, so REIT investing could be back in fashion. That means now might be the perfect time to jump on these undervalued REIT stocks currently trading for less than $10.
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Passive income is the name of the game in REIT investing, and net leases, in which long-term tenants pay a portion of the insurance, property taxes and maintenance bills for their spaces, have historically been profitable for investors. That’s why Global Net Lease (GNL), which owns and operates net-leased retail properties in the US and Europe, is a potential winner.
This REIT offers investors the benefit of net leases and a highly diversified portfolio of more than 1,200 properties in nearly a dozen countries around the world. More importantly, Global recently completed a strong second quarter of 2024, growing adjusted operating funds (AFFO) by 2% while eliminating $251 million in debt. As interest rates continue to fall and leasing activity picks up, Global could deliver good results.
The stock currently trades at $7.98 and pays a dividend of 13.82%, which translates to $1.10 per share. According to Insider Monkey, 14 different hedge funds own shares in Global, which means the pros like this stock too. Now might be the perfect time to jump on this retail REIT.
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AGNC Investment is a mortgage REIT and while these REITs can pay high dividends, the payout is highly dependent on investor-friendly (low) interest rates. These REITs use a combination of investor capital and money borrowed from the Federal Reserve to purchase large portfolios of mortgage-backed securities (MBS). The gain comes from AGNC’s ability to borrow money at a lower interest rate than the rate on the MBS in the REIT’s portfolio.
Knowing this, you might expect the Fed’s rate hikes to have a negative impact on AGNC’s ability to pay back its investors. However, a careful combination of portfolio selection and hedging strategies has ensured that this REIT has paid shareholder dividends for 55 months in a row. Even more impressive is that the REIT has paid a double-digit dividend in the 15% range, which is a great return on this REIT’s share price of $9.45.
Now that interest rates have fallen and more cuts appear to be on the way in 2025, AGNC is ready to deliver even more profits to investors. AGNC just released a strong Q3 2024 earnings report and public statements from management indicate they expect a strong 2025. If you like double-digit dividends and low buy-ins, you may like AGNC.
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Medical Properties Trust is a large healthcare REIT with more than 43,000 beds and 436 assets (according to its website) in a portfolio spanning the US, UK and Europe. Their stock took a hit earlier this year when one of its largest tenants, Steward Health, filed for bankruptcy, which may also have contributed to MPW cutting its dividend.
However, MPW recently entered into a partnership agreement with Astrana Health to purchase a managed care portfolio from Prospect for $745 million. This deal is also expected to result in a $200 million cash injection for MPW by 2025. MPW also sold five hospitals to Prime Health and closed a £631 million financing deal in the UK in the second quarter of 2024.
MPW shares trade at $4.65 and pay a 7% dividend. However, it’s worth noting that this REIT has only been paying dividends of around 14% until 2023. Now that the dust has settled on the Steward Health fallout and the Prime deal’s $200 million revenue is due in 2025, MPW’s share price and dividend can be set. for a strong recovery in 2025.
While Realty Income is undoubtedly a solid choice for investors looking for consistent monthly dividend income, it’s important to remember that publicly traded stocks are subject to market volatility. For those looking to diversify their income streams and potentially reduce exposure to market fluctuations, real estate investing through platforms like Arrivald is worth considering.
Arrivald allows individuals to invest in rental property shares for as little as $100, providing the opportunity for monthly rental income and long-term appreciation without the hassle of a landlord. With more than $1 million in dividends paid last quarter and a growing portfolio of properties across markets, Arrivald offers an attractive alternative for investors looking to build a diversified real estate portfolio.
This article Earn Passive Income With These REIT Stocks Selling for Under $10 a Share originally appeared on Benzinga.com
