Nervous investors seeking safe havens from today’s economic turmoil might look at certain equity real estate investment trusts that are offering safe, attractive dividend yields for steady returns, according to a research note by a JPMorgan analyst today.
Michael Mueller, an analyst at New York-based JP Morgan Chase & Co., said REIT dividend yields offer stable income.
However, he cautioned, it’s important that investors choose REITs that are having no trouble generating the cash flow needed to cover the dividend payments.
“The cushion provided by well-covered dividend yields has taken on increased importance,” Mr. Mueller wrote.
“REITs’ recent pullback has created a number of intriguing opportunities on the yield front that may be attractive for some income-oriented investors,” he wrote.
Mr. Mueller, who tracks 41 REIT stocks, named CBL & Associates Properties Inc. (CBL) of Chattanooga, Tenn., as his top pick, thanks to its 9.6% dividend yield.
This was followed by Developers Diversified Realty Corp. (DDR) of Beachwood, Ohio, at 7.9%, Entertainment Properties Trust (EPR) of Kansas City, Mo., at 6.8%, Realty Income Corp. (O) of Escondido, Calif., at 7.2% and Weingarten Realty Investors (WRI) of Houston at 6.9%. These stocks offer “high yields with low payout ratios,” he wrote.
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