Diversified REITs allow investors to access the real estate market with lower risk, stable income streams, and the potential for long-term capital appreciation. So, diversified REITs Ladder Capital Corp (LADR), Gaming and Leisure Properties, Inc. (GLPI), Lamar Advertising Company (LAMR), and Daito Trust Construction Co., Ltd. (DIFTY) could be ideal portfolio additions.
Diversified REITs are unique among other REIT categories because they own various property types and generate rental income from tenants. Unlike specialized REITs focused on specific sectors like residential or healthcare, diversified REITs invest in a mix of commercial properties such as office buildings, hotels, resorts, industrial facilities, and retail spaces.
This diversified portfolio helps spread risk and provides more predictable income streams, making them attractive to investors seeking stable returns. One key advantage of diversified REITs is their ability to weather economic downturns more effectively than other asset classes due to their broad exposure across different property sectors.
According to Statista, as of November 2023, the top ten diversified REITs in the United States collectively had a market capitalization of approximately $22.16 billion. The largest diversified REIT, W. P. Carey Inc. (WPC), stood at $11.48 billion in November 2023.
In 2024, the market will likely favor REITs more than the previous year. REITs are poised for a strong performance this year due to several bullish trends, low asset prices, and a potential slowdown in the Federal Reserve’s interest rate hikes.
Moreover, the mandatory obligation on REITs to pay at least 90% of their taxable income to shareholders in the form of dividends makes it a well-suited investment alternative for income-oriented investors whose approach is making stable income from their investments.
In light of these encouraging trends, let’s look at the fundamentals of the four best REITs - Diversified, beginning with number 4.
Stock #4: Ladder Capital Corp (LADR)
LADR operates as an internally managed real estate investment trust. The REIT operates in three segments: Loans; Securities; and Real Estate. It originates conduit-first mortgage loans and invests in note purchase financings and commercial mortgage-backed securities. It also owns and invests in a portfolio of commercial and residential real estate properties.
On March 15, LADR’s Board of Directors declared a first-quarter 2024 dividend of $0.23 per share of Class A common stock. The cash dividend is to be paid on April 15, 2024, to stockholders of record as of the close of business on March 28, 2024.
LADR pays an annual dividend of $0.92, which translates to a yield of 8.27% at the current share price. Its four-year average dividend yield is 9.25%. Moreover, the company’s dividend payouts have increased at a CAGR of 4.8% over the past three years.
In terms of forward non-GAAP P/E, LADR is trading at 9.07x, 15.4% lower than the industry average of 10.73x. Also, the stock’s trailing-12-month Price/Book of 0.92x is 19.9% lower than the industry average of 1.15x.
For the fourth quarter that ended on December 31, 2023, LADR’s net interest income increased 2.5% from the prior quarter to $39.82 million. The company’s distributable earnings and distributable EPS came in at $40 million and $0.32, up 2.4% and 3.2% from the previous quarter, respectively.
In addition, the company’s cash and cash equivalents stood at $1.01 billion as of December 31, 2023, versus $609.08 million as of December 31, 2022.
Street expects LADR’s revenue and EPS for the fiscal year (ending December 2025) to increase 15.6% and 9.4% year-over-year to $324.62 million and $1.34, respectively. Furthermore, the company surpassed the consensus EPS estimates in all the trailing four quarters.
LADR’s stock has gained 7.3% over the past six months and 19.2% over the past year to close the last trading session at $11.13.
LADR’s solid outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Quality. Within the REITs - Diversified industry, LADR is ranked #4 out of 46 stocks.
Click here to access additional ratings of LADR (Growth, Momentum, Value, Stability, and Sentiment).
Stock #3: Gaming and Leisure Properties, Inc. (GLPI)
GLPI engages in the business of acquiring, financing, and owning real estate property to be leased to gaming operators in triple-net lease arrangements. Its portfolio comprises of 62 premier gaming and related facilities and amenities geographically diversified and well-positioned across 19 states.
On February 26, GLPI’s Board of Directors declared a first-quarter 2024 cash dividend of $0.76 per share of its common stock. The dividend was paid on March 29, 2024, to shareholders of record on March 15, 2024. The dividend reflects an increase from the previous quarterly cash dividend of $0.73 per share for the fourth quarter of 2023.
GLPI pays an annual dividend of $3.04, which translates to a yield of 6.60% at the current share price. Its four-year average dividend yield is 6.42%. Moreover, the company’s dividend payouts have grown at a CAGR of 6.3% over the past three years.
On February 6, GLPI acquired the real estate assets of Tioga Downs Casino Resort in Nichols, NY, from American Racing & Entertainment, LLC for $175.0 million. Further, GLPI and American Racing also entered into a triple-net master lease agreement for an initial 30-year term whose initial annual rent is $14.5 million.
Peter Carlino, GLPI’s Chairman and CEO, stated, “We are pleased to add Tioga Downs to our portfolio and the new relationship with American Racing to our tenant roster. Tioga Downs further diversifies our portfolio, expanding it to 62 properties across 19 states with 8 tenants.”
In terms of forward non-GAAP P/E, GLPI is trading at 15.83x, 53.2% lower than the industry average of 33.82x. Similarly, the stock’s forward P/AFFO multiple of 12.34 is 17.8% lower than the industry average of 15.02.
GLPI’s revenue and EBITDA have grown at respective CAGRs of 7.7% and 9.9% over the past three years. The company’s EBIT has increased 11.6% over the same timeframe, and its net income and EPS have improved at CAGRs of 13.2% and 6.4%, respectively.
For the fourth quarter that ended December 31, 2023, GLPI’s total income from real estate grew 9.7% year-over-year to $369.03 million. Its net income of $217.26 million and $0.78 per common share indicates 8.8% and 4% growth from the prior year’s quarter, respectively. Further, the company’s adjusted EBITDA came in at $331.41 million, an increase of 6.2% year-over-year.
Furthermore, the company’s total assets as of December 31, 2023, were $11.81 billion compared to $10.93 billion as of December 31, 2022.
As per the company’s guidance for the fiscal year 2024, GLPI expects its AFFO to be between $1.04 billion and $1.05 billion, or between $3.70 and $3.74 per share and OP units.
Analysts expect GLPI’s FFO for the second quarter (ending June 2024) to increase 14.7% year-over-year to $0.95, and its revenue is expected to grow 4.5% year-over-year to $372.77 million. Moreover, the company has topped the consensus revenue estimates in each of the trailing four quarters, which is impressive.
Shares of GLPI have surged 2.8% over the past month to close the last trading session at $46.07.
GLPI’s POWR Ratings reflect its bright prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
GLPI has a B grade for Stability, Sentiment, and Quality. It is ranked #3 among 46 stocks in the REITs - Diversified industry.
In addition to the POWR Ratings I’ve just highlighted, you can see GLPI’s ratings for Growth, Value, and Momentum here.
Stock #2: Lamar Advertising Company (LAMR)
LAMR operates as an outdoor advertising company in the United States and Canada. It owns and operates billboards, logo signs, and transit advertising displays, along with rents space for advertising on billboards, buses, shelters, benches, logo plates, and airport terminals.
On February 22, 2024, LAMR’s Board of Directors declared a quarterly cash dividend of $1.30 per share paid on March 28, 2024, to stockholders of record of Lamar’s class A common stock and class B common stock on March 15, 2024.
LAMR pays an annual dividend of $5.20, which translates to a yield of 4.35% at the current share price. Its four-year average dividend yield is 4.41%. Also, the company’s dividend payouts have increased at a CAGR of 30.9% over the past three years.
LAMR’s trailing-12-month EBIT margin and net income margin of 31.86% and 23.44% are 52.4% and 150.9% higher than the respective industry averages of 20.90% and 9.34%.
LAMR’s revenue and EBITDA have grown at respective CAGRs of 10.5% and 14% over the past three years. The company’s EBIT has increased 18.9% over the same timeframe, while its net income and EPS have improved at CAGRs of 23.6% and 26.2%, respectively.
During the fourth quarter that ended December 31, 2023, LAMR’s net revenues increased 3.8% year-over-year to $555.91 million. Its operating income grew 74.2% from the year-ago value to $191.71 million. Its adjusted funds from operations were $215 million and $2.10 per share, up 10.5% and 9.9% from the prior year’s quarter.
In addition, the company’s adjusted EBITDA came in at $268.16 million, up 6.3% year-over-year. Its free cash flow for the quarter increased 13.2% from the year-ago value to $180.29 million.
As per the company’s guidance, LAMR expects net income per share for fiscal year 2024 to range between $5.02 and $5.07, and its AFFO per share is expected to be between $7.67 and $7.82.
Street expects LAMR’s revenue for the fiscal year (ending December 2024) to increase 3.9% year-over-year to $2.19 billion, and its FFO is expected to grow 10.6% year-over-year to $8.32 for the current year. Further, the company has surpassed the consensus revenue estimates in all the trailing four quarters.
LAMR’s shares have gained 44.9% over the past six months and 26.6% over the past year to close the last trading session at $119.41.
LAMR’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Quality. Within the same industry, LAMR is ranked #2 out of 46 stocks.
In addition to the POWR Ratings highlighted above, you can check LAMR’s ratings for Growth, Value, Sentiment, Stability, and Momentum here.
Stock #1: Daito Trust Construction Co., Ltd. (DIFTY)
Headquartered in Tokyo, Japan, DIFTY designs, constructs, and rents apartments and condominiums in Japan. The company operates in three segments: Construction; Real Estate; and Finance. It designs and constructs rental housing and other structures, ironwork and construction, building management and renovation, and whole building leasing.
DIFTY pays an annual dividend of $0.90, which translates to a yield of 3.21% at the prevailing share price. Also, its four-year average dividend yield is 4.31%.
In terms of trailing-12-month EV/EBITDA, DIFTY is trading at 7.94x, 51.9% lower than the industry average of 16.50x. Further, the stock’s trailing-12-month Price/Sales multiple of 0.64 is 85.6% lower than the industry average of 4.48. Similarly, its trailing-12-month EV/EBIT of 9.32x is 72.4% lower than the industry average of 33.80x.
DIFTY’s revenue has grown at a CAGR of 3.5% over the past three years. The company’s tangible book value has increased 10.7% over the same timeframe, and its total assets have improved at a CAGR of 5.6%.
For the nine months that ended December 31, 2023, DIFTY’s net sales increased 4.8% year-over-year to ¥1.27 trillion ($8.39 billion). Its gross profit grew 8.6% from the year-ago value to ¥205.37 billion ($1.36 billion). The company’s operating income was ¥81.27 billion ($536.88 million), up 6.9% year-over-year.
Furthermore, DIFTY’s net income of ¥60.15 billion ($397.32 million) indicates growth of 13.3% from the prior year’s period.
Analysts expected DIFTY’s revenue for the fiscal year (ended March 2024) to increase 230.7% year-over-year to $11.41 billion. Further, for the second quarter (ending September 2024), the company’s revenue is expected to grow marginally year-over-year to $2.90 billion.
Over the past six months, the stock has soared 4.3% and 13.2% over the past year to close the last trading session at $27.93.
DIFTY’s strong prospects are reflected in its POWR Ratings. The stock has an overall grade of B, translating to a Buy in our proprietary rating system.
DIFTY has an A grade for Stability and a B for Growth and Value. It has topped the list of 46 stocks within the REITs - Diversified industry.
To see the other ratings of DIFTY for Quality, Sentiment, and Momentum, click here.
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GLPI shares were unchanged in premarket trading Monday. Year-to-date, GLPI has declined -5.09%, versus a 10.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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