What are we looking for?
U.S. and Canadian real estate investment trusts that could reward investors with both growth and dividends.
With the unemployment rate in the U.S. slowly dropping and rental occupancy rates in that country at the highest levels in years, REITs have had a great run. We wanted to find REITs that have the financial strength to maintain their payouts and potentially climb higher.
More about today’s screen
This screen comes from Bloomberg’s Constantin Cosereanu, who scored U.S. and Canadian REITs by applying the following criteria:
- the REIT must have a market cap of greater than $100-million (U.S.);
- it must have a funds from operations (FFO) payout ratio of greater than zero;
- it must have a FFO yield of greater than zero;
- it must have one-year growth in FFO of greater than zero; and
- it must have a dividend yield of greater than zero.
Mr. Cosereanu applied a rating model that gives equal weight to the following factors: price to FFO, net operating income growth, FFO payout, FFO yield, FFO growth and dividend yield.
What we found
Canadian REITs are rare on this list, but a few place very nicely indeed. The top performer according to Mr. Cosereanu’s formula is Vancouver-based Pure Industrial Real Estate Trust, which stands head and shoulders above the field with a combined score of 67.9, almost 19 points above the second-place entry.
Of course, there is no guarantee that these REITs will continue to post such strong results. But with a focus on solid players boasting healthy operating metrics and consistent dividends, this list provides a good place for investors to begin their REIT research.