Few income vehicles lend themselves to income investing as much as real estate investment trusts. REITs assemble portfolios of residential or commercial properties, and lease them to tenants. In the case of retail REITs, many tenants have a national presence and rely on REIT properties to grow their business. The rent collected from tenants is then passed through to shareholders as a monthly or quarterly dividend. This company's shares are up ~30 percent YTD, and have surged ~54 percent from January lows. Despite the increase in valuation, the REIT is not too expensive yet for income investors. A piece of its business sells for ~13.5x 2016e AFFO. An investment in the stock yields 5.33 percent.
VEREIT, Inc. (NYSE:VER), formerly known as American Realty Capital Properties. VEREIT has staged a strong comeback this year, which is the result of two forces: 1. Investors have rediscovered their love for stable income vehicles this year, including real estate investment trusts. The rekindled love affair between REITs and income investors has been possible because of the Federal Reserve, which pushes yield-starved investors into high-yielding securities. 2. Investor sentiment toward VEREIT has gradually improved in 2016, and VEREIT's Chief Executive Officer deserves at least some of the credit. Non-core asset sales and a rationalization/de-risking of VEREIT's property portfolio has enticed income investors to give the real estate investment trust another chance after it fell out of grace due to an accounting scandal and a dividend suspension.
Source: Seeking Alpha
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