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Investing is like fashion in that everything runs in cycles. What was once “yesterday’s news” can easily become the “it” thing for the coming year. The Federal Reserve has cut interest rates, so REIT investing could be back in style. That means now might be the perfect time to jump on these undervalued REIT shares currently trading for less than $10.
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Passive income is the name of the game in REIT investing and Net leases, where long-term tenants pay portions of the insurance, property tax and maintenance bill for their spaces, have historically been profitable for investors. That’s why Global Net Lease (GNL), which owns and operates net-leased retail properties across the U.S. and Europe, is a potential winner.
This REIT offers investors the advantage of Net leases and a highly diversified portfolio of over 1,200 properties in nearly a dozen countries worldwide. More importantly, Global recently finished a strong Q2 2024 that increased adjusted funds from operation (AFFO) by 2% while shaving $251 million in debt. As interest rates continue to fall and leasing activity picks up, Global could pay off handsomely.
Its shares are currently trading at $7.98 and paying a 13.82% dividend, which translates to $1.10 per share. According to Insider Monkey, 14 different hedge funds own shares in Global, meaning the pros like this stock too. Now might be the perfect time to jump on this retail REIT.
AGNC Investment is a mortgage REIT and although these REITs can pay high dividends, the payout depends heavily on investor-friendly (low) interest rates. These REITs use a combination of investor capital and money borrowed from the Federal Reserve to buy large mortgage-backed securities (MBS) portfolios. The profit comes from AGNC’s ability to borrow money at a lower rate than the interest rate on the MBS in the REIT’s portfolio.
Knowing this, you might expect the Fed’s rate hikes to negatively affect AGNC’s ability to pay off its investors. However, a careful combination of portfolio selection and hedging strategies has kept this REIT on a 55-consecutive month streak of paying shareholder dividends. More impressively, it’s been paying a double-digit dividend in the 15% range, which is a great return on this REIT’s $9.45 share price.
Now that interest rates have gone down and it appears that more cuts are coming in 2025, AGNC is primed to deliver even more profits to investors. AGNC just released a strong Q3 2024 earnings report and public statements from management indicate that they are expecting a strong 2025. If you like double-digit dividends and low buy-ins, you may like AGNC.
Medical Properties Trust is a large health care REIT with over 43,000 beds and 436 assets (per its website) in a portfolio spread across the U.S., the United Kingdom and Europe. Their shares took a hit earlier this year when one of its largest tenants, Steward Health, went bankrupt, which may also have contributed to MPW cutting its dividend.
However, MPW recently closed a partnership deal with Astrana Health to buy a managed care portfolio from Prospect for $745 million. This deal is also expected to result in a $200 million cash infusion for MPW in 2025. MPW also sold five hospitals to Prime Health and closed a £631 million financing deal in the UK in Q2 2024.
MPW shares are trading at $4.65 and paying a 7% dividend. However, it’s worth noting that this REIT has paid dividends in the 14% range as recently as 2023. As the dust settles from the fallout with Steward Health and the Prime deal’s $200 million revenue comes in 2025, MPW’s share price and dividend could be set for strong rebounds in 2025.
While Realty Income is undoubtedly a solid choice for investors seeking 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 Arrived is worth considering.
