Be A 1-Click Landlord: 3 Real Estate Stocks Paying Up To 7%

Stephen chose a precarious time to buy. He purchased a REIT right before the sector’s ensuing rout. But it didn’t matter because he knew exactly whatto buy. He banked an easy $91,405 on this investment while most first-level REIT investors sweated and treaded water.

Park Hotels & Resorts (PK) was a relatively new REIT that was spun off by Hilton Worldwide (HLT) at the beginning of 2017. Director Stephen Sadove, around this time last year, bought 9,600 shares of his own firm – right before REITs sank in an epic rout that soon unfolded.

The “dumb” REIT index VNQ was soon dumped in unison by investors. It’s since recovered, but has still only delivered 3.5% gains in 13 months. Stephen, meanwhile, has enjoyed 36.7% total returns (including dividends) on his smart trade, good for a $91,405 haul!

His buy was a “no brainer” in hindsight. PK was trading for less than 10 times its funds from operations (FFO), which is the rough equivalent of a stock selling at a price-to-earnings (P/E) ratio under 10. In today’s pricey market, low P/Es – and 10 is low in any environment – are rare.

When we see them, the stock is usually cheap for a reason: the company isn’t growing, or its business model is threatened by Amazon, for example.

Our man Stephen has made his money but there are three more cheap lodging stocks to be had today (even with the market’s recent runup).

The three lodging REITs we’ll discuss here yield between 4% and 7%. Better still, they’re all trading cheaper than the industry average. I bet their insiders are digging through their own bargain bins now.

Apple Hospitality REIT (APLE)

Dividend Yield: 7.3%

Let’s talk about “The Other Apple.”

I’ve actually gotten a few emails from readers who first came across this real estate investment trust by accident. They tried to look up Apple (AAPL), and instead they got Apple Hospitality REIT.

They sound similar, but there are just a couple subtle differences in their business models.

Apple Hospitality, is one of the largest hotel REITs in the country, boasting nearly 31,000 rooms in its 242 hotels in 88 markets across 34 states, serving attractive urban and suburban locations. Its portfolio is primarily split between Marriott (MAR) and Hilton (HLT) brands, though it does own one hotel under a Hyatt (H) brand as well.

The REIT’s 2018 results were admittedly uninspiring. While net income of $206 million was up 12.9% year-over-year, its modified funds from operations (MFFO) were off 1% to $1.72 per share, and its Revenue Per Available Room (RevPAR, an important hotel metric) was just 0.5% better. But it’s worth noting that the company was going up against some difficult 2017 comps.

The ace up Apple’s sleeve right now is a skinflint valuation of just 9.6 times its MFFO, as well as a 7.3% dividend yield that’s well on the high end of its historical range.


This article originally appeared on Forbes