{"id":20831,"date":"2023-09-20T14:24:07","date_gmt":"2023-09-20T14:24:07","guid":{"rendered":"https:\/\/microloannexus.com\/investing\/2-dividends-growing-triple-digits-to-buy-as-rates-roll-over\/"},"modified":"2023-09-20T14:24:09","modified_gmt":"2023-09-20T14:24:09","slug":"2-dividends-growing-triple-digits-to-buy-as-rates-roll-over","status":"publish","type":"post","link":"https:\/\/microloannexus.com\/?p=20831","title":{"rendered":"2 Dividends (Growing Triple Digits) To Buy As Rates Roll Over"},"content":{"rendered":"<div>\n<p>Over the last few days, not one but<em> three<\/em> signals I use to read the tea leaves in REITs\u2014one of our favorite places to hunt for big, and growing, payouts\u2014<em>all<\/em> flashed \u201cbuy.\u201d<\/p>\n<p>That means it\u2019s <em>finally <\/em>time to start selectively picking up these income plays. I\u2019ll name two with dividends on multi-year growth runs below. Tickers in a sec. First, let\u2019s talk timing. Here\u2019s why REITs are jumping up our dividend priority list now:<\/p>\n<ul>\n<li><strong>They <em>haven\u2019t <\/em>followed stocks higher in \u201923\u2014<\/strong>so our \u201clandlords,\u201d which own everything from shopping malls to warehouses, apartment buildings and cellphone towers, are <em>cheap<\/em> in relation to the popular kids of the S&amp;P 500. So \u2026<\/li>\n<li><strong>Their yields are (still) historically high, <\/strong>at around 4.6%, the average REIT pays more than triple the 1.5% the typical S&amp;P 500 stock dribbles out, plus \u2026<\/li>\n<li><strong>We\u2019re rolling into \u201cstock season,\u201d<\/strong> with October, November and December typically being three of the best months for stocks, and September being one of the worst. With stocks in the red so far this month, September is playing its usual \u201cspoiler\u201d role\u2014and keeping our buy window open.<\/li>\n<\/ul>\n<p>We\u2019re also getting a green light to buy REITs from an unexpected place: rising Treasury yields. As I write this, the 10-year Treasury yield is bumping its head on the 4.3% ceiling that it\u2019s bounced off of repeatedly in the last year.<\/p>\n<p>Each time has been a great opportunity to buy bonds because bond <em>prices<\/em> rise as <em>yields<\/em> fall. Well, select REITs should do even better. Over the short run, REITs trade like bonds. They decline when rates rise\u2014and rise when rates decline.<\/p>\n<p><fbs-ad position=\"inread\" progressive=\"\" ad-id=\"article-0-inread\" aria-hidden=\"true\" role=\"presentation\"><\/fbs-ad><\/p>\n<p>But a good REIT beats a great bond. REITs are actual businesses that can <em>grow<\/em> cash flows simply by raising their rents. Which means, not only are their prices low today, but they have more room for <em>gains<\/em> than a bond fund.<\/p>\n<p>By the way, we shouldn\u2019t go further without tipping our caps to Uncle Sam, whom we can thank for REITs\u2019 high yields: the government gives REITs a hall pass on corporate taxes so long as they pay 90% of their income as dividends. The resulting savings\u2014and the fact that this hoard must be passed to us\u2014drive those big dividends, and often fast dividend growth, too.<\/p>\n<p>So if you like a fat yield <em>and<\/em> a dividend that soars every year (and sometimes quarterly), REIT-land is the place for you.<\/p>\n<p>And there\u2019s more working in our favor here, too. I know we\u2019ve talked about the \u201cDividend Magnet\u201d again and again. But there\u2019s a good reason: <em>a rising dividend is the No. 1 driver of share prices.<\/em> Take a look at this price and dividend action on warehouse REIT <strong>First Industrial Realty Trust (FR).<\/strong><\/p>\n<p>Heck, maybe in the case of FR we should call it a \u201cDividend forklift!\u201d<\/p>\n<p>That\u2019s the payout and price action on <strong>First Industrial Realty Trust (FR) <\/strong>in the last 10 years. FR owns 444 industrial properties across the US, with a focus on the coasts.<\/p>\n<p>As you can see in the chart above, FR\u2019s dividend went a bit flat in the mid-teens. But it\u2019s been sprightlier lately, pulling up the price. As you can also see above, the stock now lags the dividend\u2014and it tends to \u201ccatch up\u201d over time.<\/p>\n<p>These days, FR\u2019s catching a tailwind from \u201conshoring,\u201d or US and multinational companies shifting their operations to the US and away from basket cases like China.<\/p>\n<p>Every month, it seems, we\u2019re reading about a new factory opening in America, and all that hammering, welding and assembling happening here has cranked up demand at FR\u2019s warehouses: in the second quarter, occupancy was 97.7%. The company also renewed or initiated 43 new leases in the quarter at an average rent increase of an eye-popping 74%.<\/p>\n<p>So it\u2019s no wonder management boosted guidance to $2.35 to $2.43 in funds from operations (FFO, the key profitability metric for REITs like FR) for all of 2023. The dividend occupies just 53% of the midpoint of that range, so it\u2019s plenty safe.<\/p>\n<p>With onshoring still surging, warehouses in the right spots to capitalize, FFO rising and long rates looking toppy, FR\u2019s shares\u2014and payout\u2014could catch a lift from here.<\/p>\n<p><strong>A 4.1%-Paying Residential REIT With a Tech Edge<\/strong><\/p>\n<p>Now let\u2019s flip to the residential side, specifically to <strong>Essex Property Trust (ESS),<\/strong> owner of more than 62,000 apartment units in California and Washington State. It\u2019s an indirect play on three trends sweeping its tech-powered markets:<\/p>\n<ul>\n<li><strong>Surging AI investment, <\/strong>driving a rebound in venture-capital funding in the Bay Area, following a tough (to put it mildly!) 2022.<\/li>\n<li><strong>Ongoing high mortgage rates, <\/strong>which are pushing more buyers out of the market\u2014and into Essex\u2019s rentals, supporting the REIT\u2019s 96.6% occupancy rate.<\/li>\n<li><strong>The (partial) return to the office,<\/strong> as more firms, like <strong>Salesforce (CRM), Apple (AAPL), Meta (META), Amazon.com (AMZN)<\/strong> and <strong>Alphabet (GOOGL),<\/strong> now require staff to be in the office at least three days a week.<\/li>\n<\/ul>\n<p>Those forces are driving Essex\u2019s FFO\u2014and dividend\u2014higher. History is also on our side with this 4.1%-payer, which has been hiking its payout annually for 29 straight years.<\/p>\n<p>Over the last decade, we\u2019ve seen Essex\u2019s share price steadily track its payout higher, up till the washout of 2022, from which Essex\u2014and REITs generally\u2014have yet to recover. That\u2019s our upside with this West Coast apartment maven:<\/p>\n<p>There\u2019s more here, too\u2014because the next time someone tells you that REITs are carrying too much debt in today\u2019s high-rate world, show them the image below. It\u2019s a snapshot of Essex\u2019s team putting on a debt-management masterclass:<\/p>\n<p>That\u2019s right\u2014Essex is paying a weighted average interest rate of just 3.3%! If you\u2019ve ever wondered if big companies are getting a better debt deal than you and me, well, there it is. And with just under 7% of its debt maturing by the end of 2024, when rates are expected to be on the downslope, Essex is in a nice spot indeed.<\/p>\n<p>The kicker: the REIT saw same-property revenues rise 4% in Q2, far more than its interest payments. Meantime, operating expenses actually <em>fell\u2014<\/em>it\u2019s been a while since we\u2019ve seen that!\u2014to the tune of 1.2%.<\/p>\n<p>Finally, the dividend is safe, with management boosting the midpoint of forecast 2023 core FFO to $15.00, and the annualized quarterly payout accounting for a comfortable (for a REIT) 61% of that.<\/p>\n<p><em>Brett Owens is chief investment strategist for <\/em><em data-ga-track=\"ExternalLink:https:\/\/contrarianoutlook.com\/free-monthly-dividend-report-offers\/forbessig?source=MNTHLYFSIGCOREG=&amp;utm_source=forbes&amp;utm_medium=cpc&amp;utm_campaign=signature\">Contrarian Outlook<\/em><em>. For more great income ideas, get your free copy his latest special report: <\/em>Your Early Retirement Portfolio: Huge Dividends\u2014Every Month\u2014Forever.<\/p>\n<p><em>Disclosure: none<\/em><\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.forbes.com\/sites\/brettowens\/2023\/09\/20\/2-dividends-growing-triple-digits-to-buy-as-rates-roll-over\/\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Over the last few days, not one but three signals I use to read the tea leaves in REITs\u2014one of our favorite places to hunt for big, and growing, payouts\u2014all flashed \u201cbuy.\u201d That means it\u2019s finally time to start selectively picking up these income plays. I\u2019ll name two with dividends on multi-year growth runs below.<\/p>\n","protected":false},"author":1,"featured_media":20832,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[],"class_list":{"0":"post-20831","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investing"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.12 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>2 Dividends (Growing Triple Digits) To Buy As Rates Roll Over | Micro Loan Nexus<\/title>\n<meta name=\"description\" content=\"Over the last few days, not one but three signals I use to read the tea leaves in REITs\u2014one of our favorite places to hunt for big, and growing,\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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