In this sector paper, we provide an update on our 2019 research, identifying more secure real estate income REIT opportunities.
We see the benefits of these “safer harbour” REITs as being apparent in both good and bad markets. In the past 12 months, the basket of 16 REITs has outperformed the sector by over 11%, and also outperformed the wider market. It has beaten the wider market in eight out of the 13 months since our first report on this sector, published in March 2019, proving its mettle in rising – as well as falling – markets. The reason is income. Not only are dividend yields above the sector and the market, at over 5%, but they have also proven resilient. Three-quarters of the basket has not cut the dividend, and is most unlikely to do so in the future. Several of those still trade below NAV and on yields of up to 7%. Half of those that are not cutting are yielding over 5.5%, and growing.
Hardman & Co analyst Mike Foster joined DirectorsTalk to explain his research. Click on the player below to listen to the interview.