Three real estate companies were topping the S&P 500 Index in terms of dividend yield on Monday. The dividend yield for the benchmark of the U.S. stock market was 1.92% on Friday.
The stocks were QTS Realty Trust Inc. (QTS, Financial), STORE Capital Corp. (STOR, Financial) and Camden Property Trust (CPT, Financial). Two catalysts tempt investors to buy shares of these companies.
First, sell-side analysts have issued a strong buy recommendation rating for each of them.
Second, the interest rate reduction to 2.25% implemented by the Federal Reserve on July 31, along with more interest rate cuts to come, create a favorable environment for real estate investors. We will likely witness growing demand for mortgages resulting from an increase in house sales.
The labor market is expected to remain strong for several quarters, underpinning the demand for old and new buildings.
Nonfarm payrolls in the U.S. grew by 164,000 jobs last month, in line with market expectations. Looking ahead, lower interest rates should also stimulate the demand for investments supporting the creation of new jobs. Additionally, the trend in analysts’ expectations for nonfarm payrolls in the U.S. remains positive.
Shares of QTS Realty Trust closed at $48.29 on Friday for a market capitalization of $2.68 billion. The stock has a forward dividend yield of 3.64% versus the industry median of 5.28%.
The Overland Park, Kansas-based real estate company has paid quarterly dividends since Dec. 7, 2014.
On Oct. 4, QTS Realty Trust will pay a quarterly dividend of 44 cents per share, in line with the previous payment, to shareholders of record as of Sept. 19. The ex-dividend date is scheduled for Sept. 18.
The stock also has a price-earnings ratio of 19.16 versus the industry median of 18.45, a price-book ratio of 2.83 versus the industry median of 1.13 and a price-sales ratio of 5.47 versus the industry median of 7.52.
The stock gained 8% over the 52 weeks through Aug. 9. Shares are trading above the 200-, 100- and 50-day simple moving average lines. The 52-week range is $34.27 to $48.82.
GuruFocus assigned a rating of 4 out of 10 for the company's financial strength and an 8 out of 10 rating for its profitability and growth.
Wall Street issued an average target price of $51.50 per share, reflecting 6.6% upside from the closing price on Friday.
The 14-day relative strength index of 65 suggests the stock is neither overbought nor oversold.
STORE Capital closed at $36.27 on Friday, reaching a new 52-week high. The market capitalization was $8.38 billion. The stock has a forward dividend yield of 3.64% versus the industry median of 5.28%.
The Scottsdale, Arizona-based single-tenant operational real estate company has paid dividends since Jan. 15, 2015. Currently, the company pays a quarterly dividend of 33 cents per common share.
The stock has a price-earnings ratio of 36.16 versus the industry median of 15.63, a price-book ratio of 1.93 versus the industry median of 1.13 and a price-sales ratio of 13.28 compared to the industry median of 7.52.
The stock climbed 28% over the past year through Aug. 9 to above the 200-, 100- and 50-day simple moving average lines. The 52-week range is $26.93 to $36.27 per share.
GuruFocus assigned a financial strength rating of 5 out of 10 and a profitability and growth rating of 8 out of 10.
The 14-day relative strength index of 74 suggests the stock is nearing overbought levels.
Wall Street issued an average target price of $35.67 per share.
Camden Property Trust (CPT, Financial) closed at $105.78 per share on Friday with a market capitalization of $10.24 billion. The forward dividend yield is 3.03% versus the industry median of 5.28%.
The Houston-based real estate investment trust has paid quarterly dividends since Oct. 29, 1993. Currently, the company pays a quarterly dividend of 80 cents per common share.
The stock also has a price-earnings ratio of 64.50 versus the industry median of 15.63, a price-book ratio of 2.73 versus the industry median of 1.13 and a price-sales ratio of 10.33 versus the industry median of 7.52.
The stock rose 14% over the past year through Aug. 9, sending the share price above the 200- and 100-day simple moving average lines. The price is still slightly below the 50-day line. The 52-week range is $83.67 to $110.42.
GuruFocus assigned a rating of 5 out of 10 for the company's financial strength and a rating of 7 out of 10 for its profitability and growth.
Wall Street issued an average target price of $112.80 per share, which represents a 6.64% increase from the closing price on Friday.
The 14-day relative strength index of 51 suggests the stock is neither oversold nor overbought.
Disclosure: I have no positions in any securities mentioned.
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