Real Estate Stocks From the Watchlist

• Approximately $1.5 trillion is invested in U.S. real estate investment trusts, according to Morningstar.
• REITs generate revenue through the properties they own.

Due to their legal structure, REITs are required to pay out 90% of their taxable income to shareholders in the form of dividends. Those payments typically are made quarterly or monthly. The average dividend yield on REITs is in the neighborhood of 3% compared to the 1.5% on the 10-year.

REITs – Watchlist

Lexington Realty Trust – LXP

Lexington Realty Trust (LXP) is a real estate investment trust principally involved in the ownership of equity and debt investments in single-tenant properties and land throughout the United States.

Lexington primarily owns office, industrial, and retail properties. In terms of total square footage, the vast majority of the company’s real estate portfolio comprises industrial and office space.

Lexington derives almost all of its revenue from rental income. About half of this comes from Lexington’s office holdings, while its industrial and land and infrastructure assets also represent substantial revenue streams for the company.

Lexington serves tenants from a variety of industries. About half of these customers are engaged in long-term leases.

iStar Inc – STAR

iStar Inc (STAR) finances, invests in, and develops real estate and real estate-related projects. The company operates through four segments. 

The real estate finance segment comprises a portfolio of senior and subordinated loans secured by commercial real estate assets.

The net lease segment is engaged in lease transactions across office, industrial, retail, hotel, entertainment, and other property types, primarily to corporate tenants.

The operating properties segment owns, operates, and revitalises office, retail, and hotel properties.

The land and development segment is engaged in land sales, as well as design, entitlement, and development of residential communities.

The company’s primary source of revenue is net lease income.

Starwood Property Trust (STWD), while not on the watchlist this week, also pays a handsome yield of 7.5%. The Vanguard Real Estate ETF (VNQ) can also provide exposure through its many holdings.

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Happy Trading,

Vinny

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