Stocks
By Garrett Baldwin, Executive Producer, Money Morning •
The ongoing spread of the COVID-19 coronavirus has investors flocking to safety. Gold prices hit a seven-year high Thursday, while U.S. Treasury yields plunged yet again.
The 10-year bond hovered at 1.53% - a pittance for investors who are looking out on a decade horizon.
Gold - which doesn't pay a yield - also isn't the most attractive option for anyone seeking income.
And things are only going to get more challenging for income-seeking investors in the months ahead...
However, you don't have to settle for weak returns or no-income-generating assets...
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That's why I highly recommend that you explore real estate investment trusts (REITs) as a source of potential asset appreciation and income generation.
REITs produce gobs of cash from rent and other fees generated from properties including office buildings, storage units, multifamily units, and more.
And the three high-yield REITs I'm discussing today produce annual yields of 8%, 10%, and 12%.
High-Yield REITs to Buy No. 3
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CoreCivic Inc. (NYSE: CXW) isn't a popular name among the social justice community.
The firm is a for-profit operator of jails and detention facilities across the United States and along the nation's borders.
The company has long been a target of divestment efforts by activists pushing institutional investors to no longer own units in the company.
Shares have pulled back by roughly 33% from 52-week highs of $24.63 per unit.
However, CXW stands as a potential proxy of U.S. President Donald Trump's campaign.
As Democrats move to shut down Immigration & Customs Enforcement and border detentions, CoreCivic has moved to obtain new contracts with states and the federal government.
With state-run prisons facing overcrowding, firms like CXW provide the government with a cheaper alternative to building new holding facilities.
CXW benefits from government-backed contracts that extend multiple years.
The company's cash flow has grown steadily quarter-over-quarter over the last few years.
The stock is trading at a ridiculously low free-cash-flow level, meaning it is underpriced and provides significant value.
CXW has a dividend of 10.3% and a price target of $23 over the next 12 months. That target represents a potential upside of 35% from today's current price.
High-Yield REITs to Buy No. 2
Uniti Group Inc. (NASDAQ: UNIT) is a REIT that centers on communications infrastructure with an emphasis on the wireless industry.
The company operates more 6 million fiber strand miles and roughly 630 wireless towers across the United States.
Uniti has benefited recently from a settlement proposal to address its ongoing battle with Windstream Holdings Inc. (OTCMKTS: WINMQ)
The proposed merger between T-Mobile US Inc. (NYSE: TMUS) and Sprint Corp. (NYSE: S) is also a major tailwind.
Now, the company can focus on the rollout of 5G and deployment of assets from wireless companies.
The firm could also benefit from the expansion of DISH Network Corp. (NASDAQ: DISH). This will boost its market share as a standalone organization.
The REIT carries an 8.4% yield and has solid upside in the year ahead...
I think UNIT has the potential to climb to $17 per share.
That price target represents upside of 57% ahead.
High-Yield REITs to Buy No. 1
Macerich Co. (NYSE: MAC) is our top high-yield REIT.
The company is the third largest owner and operator of shopping centers in the United States.
The shopping mall industry has faced incredible pressure over the last year, with MAC shares dropping as much as 50% over the last year.
However, a recent deal by Simon Property Group Inc. (NYSE: SMG) has breathed new life into this beaten-down part of the REIT world...
Simon purchased Macerich's rival, Taubman Centers Inc. (NYSE: TCO), for $3.6 billion.
The deal has put Macerich in the crosshairs of other large real estate and private equity groups that may be looking to scoop up cash-yielding assets on the cheap. Macerich is a firm that is worth buying and holding.
Macerich currently pays a massive 12.7% dividend.
And its underlying share price stands to benefit from ongoing deal-making in the space.
The REIT has upside of $40 from current levels in an M&A environment.
That means it could fetch a 71% premium from today's levels.
The Bottom Line
If you're looking to generate yield in today's low-rate environment, then these REITs could be for you.
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About the Author
Browse Garrett's articles |
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.
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