This 4% Yielding High Quality REIT Is Finally Worth Buying

Almost exactly four months have passed since I recommended against buying this REIT because of its elevated valuation on a FFO basis. Since the REIT's shares were changing hands for ~22x 2016e FFO, buying wasn't really an option. In light of the nearly 29 percent YTD gain in National Retail Properties' equity valuation at the time, I called for caution and said that the "REIT was vulnerable to a wider sector correction."

The correction in REIT valuations has made National Retail Properties, Inc. (NYSE:NNN) a lot cheaper lately. Though the REIT sell-off may continue in the wake of today's short term interest rate hike, I think today's reward-to-risk ratio is already tilted in favor of income investors. National Retail Properties pulls in a great amount of cash flow from its property portfolio, and the commercial REIT sells for a much lower FFO multiple than just a few months ago. Further, the REIT's excellent dividend coverage makes National Retail Properties a quality income vehicle of choice.

Source: Seeking Alpha

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