One way around this would be for me to load up on a few of the best real estate investment trusts. This would help to diversify my portfolio and may provide some protection against a correction or market crash. 

Reliable tenants

My first pick of the best real estate investment trusts to buy now is Primary Health Properties (LSE: PHP). This company owns purpose-built facilities which it leases out to GPs and government bodies. 

Unsurprisingly, rental income is about as predictable as it gets. Occupancy rates are also very high, at 99.6%. I can’t see this falling in the aftermath of the pandemic either. In fact, Covid-19 has served as a reminder of the importance of providing access to appropriate healthcare outside of hospitals.

Sure, PHP will never shoot the lights out. The share price has climbed a little under 50% since 2016. That’s clearly far less than I could have made elsewhere, highlighting arguably its biggest drawback.

Then again, massive gains aren’t the objective here. This is primarily a vehicle for protecting cash. It’s also a great income play. Right now, analysts have PHP yielding 3.7%. 

Hot property

Another option if I were looking for downside protection, at least in my view, is Tritax Eurobox (LSE: EBOX). If the name rings a bell, that’s because the much larger, UK-focused Tritax Big Box is currently knocking on the door of the FTSE 100. 

EBOX specialises in what might be regarded as ‘hot property’ at this point in time, namely warehouses. Thanks to the huge growth seen in e-commerce (and supported by the pandemic), retailers are crying out for more logistics space to hold their stock. This has helped send the share price more than 30% higher over the last year. 

Yes, an economic slowdown may put an end to this momentum as people tighten the purse strings. Even if this doesn’t happen, we could see more money being spent on experiences as opposed to possessions for a while.

However, I doubt this will hold back EBOX for long. And at around a £750m market cap, the company has a lot of space left to grow. The shares also yield 3.5%, as I type. 

Inflation-linked income

I think we can all agree that supermarkets are pretty defensive businesses. Since we all need to eat, it makes sense that cautious investors might want some exposure to this space.

If I didn’t want the hassle of picking a winner out from the pack, I could buy Supermarket Income REIT (LSE: SUPR). It aims to provide owners with inflation-linked income as well as capital appreciation over time. It does this by investing in omnichannel stores — large supermarkets that also operate as fulfilment centres for customers wanting home delivery and the option to click and collect. Its chief customers are the UK’s ‘big four’: market-leader Tesco, Sainsbury, Asda and Morrisons.

Will this approach deliver greater gains than investing in one of the companies mentioned above? Probably not. However, SUPR does boast a super forecast yield of 4.9%.

Like PHP and EBOX, I think this makes it one of the best real estate investment trusts to buy now. 

The post 3 of the best real estate investment trusts to buy now appeared first on The Twelfth Magpie.

More reading

• £10,000 in either of these FTSE 250 gems could net around £800 in passive income. But which to pick?
• 1 REIT could turn a £20,000 ISA into annual passive income of £1,580
• With yields of 8.4% and 7.9%, are these FTSE 250 shares perfect for a Stocks and Shares ISA?
• 8% dividend yield! This REIT could be a BIG winner after Keir Starmer’s resignation
• With an 8.5% dividend yield, is this cheap income stock a no-brainer?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Morrisons, Primary Health Properties, Tesco, and Tritax Big Box REIT. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Here, I’m going to highlight three UK real estate investment trusts that I believe are attractive investments. I think these are three of the best REITs to own for 2020 and beyond.

Top UK real estate investment trusts

One of my favourite REITs is FTSE 250 constituent Tritax Big Box (LSE: BBOX). It’s a leading real estate company that focuses on logistics real estate. It owns and manages sophisticated warehouses and lets these out to major retailers such as Amazon, Tesco, and DHL.

There are a number of reasons I think Tritax is one of the best UK REITs to own. Firstly, it’s very well placed to benefit from the ongoing shift to online shopping. As we do more of our shopping online, retailers are going to need more access to the kind of strategically-located distribution warehouses that Tritax owns.

Secondly, BBOX has built up an impressive track record in recent years. For example, it has now put together five consecutive dividend increases.

BBOX shares currently trade on a forward-looking P/E ratio of about 22.9 and sport a prospective dividend yield of 4.3%. I think those metrics are attractive.

Attractive dividend yields

Another real estate investment trust I like is Primary Health Properties (LSE: PHP). It’s a FTSE 250-listed REIT that focuses on healthcare facilities. Its portfolio comprises roughly 500 healthcare facilities across the UK and Ireland, the vast majority of which are GP surgeries.

One reason I like PHP is that the company is well placed to benefit from the UK’s ageing population. According to Age UK, by 2030, more than 20% of the UK population will be aged 65 or older. This means demand for healthcare should be high.

Another reason I like this REIT is that a large proportion of its rental income is backed by the UK government. This means the stock offers a high level of security.

PHP shares currently have a forward-looking P/E ratio of about 25.5. That’s not cheap, but this stock is worth a premium, in my view. The prospective dividend yield on offer is about 4%.

A highly resilient REIT

Finally, I also like the look of Safestore (LSE: SAFE). It’s a FTSE 250-listed REIT that specialises in self-storage solutions. It currently has around 160 stores across the UK and Europe.

There are a few reasons I see investment appeal here. Firstly, demand for self-storage in the UK remains strong. Annual turnover for the industry was £766m in 2019, up from £540m in 2016.

Secondly, self-storage is a resilient business. This is illustrated by the fact that the company recently reported a 9% increase in revenue for the six months to 30 April. That’s impressive in the midst of a global pandemic. “We believe the resilient characteristics of the self-storage industry place the business in a strong position to withstand the economic uncertainty arising from Covid-19,” the company said.

SAFE shares currently trade on a forward-looking P/E ratio of 24.5 and offer a prospective dividend yield of 2.5%. Once again, that’s not cheap. However, this is a high-quality REIT that deserves a premium valuation, I feel.

The post I think these are 3 of the best UK real estate investment trusts for 2020 and beyond appeared first on The Twelfth Magpie.

More reading

• £10,000 in either of these FTSE 250 gems could net around £800 in passive income. But which to pick?
• 1 REIT could turn a £20,000 ISA into annual passive income of £1,580
• With yields of 8.4% and 7.9%, are these FTSE 250 shares perfect for a Stocks and Shares ISA?
• 8% dividend yield! This REIT could be a BIG winner after Keir Starmer’s resignation
• 1 REIT I’ve bought for a lifetime of passive income!

Edward Sheldon owns shares in Tritax Big Box REIT. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Primary Health Properties, Tesco, and Tritax Big Box REIT and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The UK property market is going through uncertain times. From Brexit to slowing growth, there are mounting concerns that the property market is cooling off after many years of growth. British Land and Land Securities, two large listed real estate investment trusts (REITs) which are seen as bellwethers for the market, have reported declines in their portfolio valuations and rising vacancy rates for the first time in many years.

But for long-term investors, there could also a buying opportunity on offer. Not all REITs are reporting falling valuations, with many still continuing to report positive valuations gains and rising rents.

Defensive portfolio

Secure Income REIT (LSE: SIR) is one such sector operator. Over the first six months of the year, the trust’s net asset value (NAV) per share gained 9.9% to 355.5p, as its portfolio valuation rose by 4.8% to £1.72bn since 31 December 2016. Rents increased 2.7% over six months to 30 June, while the vacancy rate remained at 0%.

These results show that although there are parts of the UK property market beginning to slow, there’s growing divergence between different property sectors. Unlike the bellwether REITs, which are mainly invested in retail and office space, Secure Income instead focuses on healthcare, leisure and hotel assets.

And as the group has a weighted average unexpired lease term of 22.7 years with no break options, Secure Income’s portfolio is also more defensive than a typical REIT. As such, I expect its portfolio to hold up well amid uncertainty in the broader market.

Looking ahead, City analysts expect dividends this year will rise to 13.9p per share, giving investors a prospective yield of 3.9%. And although the REIT currently trades at a 1% premium to its NAV, I believe this reflects the high level of investor demand for safe income-generating assets.

Irish property

Another REIT showing resilient growth is Irish property investment company Green REIT (LSE: GRN). The group owns and manages a €1.38bn commercial property portfolio centred primarily around Dublin.

Tenant demand and occupancy rates for Dublin office space have held up well in comparison to London, thanks to favourable fundamentals. The Irish market is set to benefit from a rise in take-up of new office space over the next few years, as financial institutions look to set up offices in other EU member states, post Brexit.

For the year to 30 June, Green REIT’s NAV per share rose 9% to €1.66, following revaluation gains of €97m over the past year. Prime headline rents in Dublin city centre have remained static in the last 6 months, but its vacancy rate fell slightly to 1.5%. What’s more, its balance sheet remains strong, with a loan-to-value ratio of 20.2%.

Based on today’s stock price, the proposed 5 cent per share dividend payout works out as an uninspiring yield of around 3.3%. However, valuations are more tempting, with Green REIT now trading at 9% discount to its NAV.

The post 2 real estate investment trusts for long-term dividend investors appeared first on The Twelfth Magpie.

More reading

• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Jack Tang has no position in any shares mentioned. The Motley Fool UK has recommended AstraZeneca. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Commercial property also has a low level of correlation to fixed income and equities asset classes, and this makes it an important investment to include as it can help to diversify risk and reduce overall volatility in a portfolio.

However, building your own property portfolio may not be an option for most investors as it requires large, upfront amounts of capital and is potentially very time-consuming. Most investors would instead benefit from putting their money into real estate investment trusts (REITs), quoted companies which own and manage income-producing property portfolios. As such, REITs offer a way for investors to access the property market without having to buy property directly.

With this in mind, I’m taking a look at two tempting high-yield REITs.

Industrial

Hansteen Holdings (LSE: HSTN) is undergoing a major transformation as the pan-European REIT sells off its entire property portfolio in Germany and Netherlands for €1.28bn. This leaves the company with investments in the UK totalling £677m, with another £35m invested in Belgium and France.

The company is also looking to increase its UK exposure, with Hansteen seeking to buy beleaguered Industrial Multi Property Trust (LSE: IMPT) for 330p per share. IMPT has a property portfolio valued at £86.2m with an annual rent roll of around £8m, but is highly geared, with a loan-to-value ratio of 73% .

Given IMPT’s estimated adjusted NAV figure of 307.4p per share, I expect the acquisition to be slightly dilutive to Hansteen’s NAV in the short term. In the longer run though, the deal seems likely to be accretive given the proximity of IMPT’s properties to existing Hansteen management offices, which will likely yield significant cost synergies. There’s also the potential for NAV growth from asset management opportunities, which due to IMPT’s high debt load, may have been previously overlooked.

Looking forward, Hansteen’s shareholders could be due a hefty special dividend of up to £600m following the sale of its German and Dutch assets. And post-special dividend, shares in Hansteen could look to trade at a respectable prospective dividend yield of 5%.

Diversification

One major benefit of investing in property via REITs over direct investment is diversification. A typical REIT owns a large number of properties and pursues a strategy of leasing properties to multiple tenants, with some even investing in a mix of property types associated with different business sectors.

AEW UK REIT (LSE: AEWU) is one such company — it’s a diversified small-cap which invests in office, retail and industrial space, with each of the three sectors representing roughly a third of its portfolio value.

The company is managed by AEW UK Investment Management, an affiliate of AEW Global, one of the largest real estate investment managers in the world, with more than €50bn in assets under management in North America, Europe and Asia. It has an annual management fee of 0.9% of invested NAV, with the company targeting a total annual return in excess of 12% on the IPO issue price over the medium term.

The REIT currently trades at a 7% premium to its NAV and pays its shareholders a yield of 7.8%.

The post These 2 property stocks could be retirement cash cows appeared first on The Twelfth Magpie.

More reading

• How much is needed to target a £2,999 monthly passive income?
• 7.5% yields! Here are 2 very different dividend stocks to consider buying in June
• £9,000 in an ISA? Here’s how to target a £675 passive income with 7% investment trusts

Jack Tang has no position in any shares mentioned. The Motley Fool UK has recommended Hansteen Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Show me the dividends

The London-focused group also revealed that on average, lettings had been secured at 6.9% ahead of December 2015 ERV, with vacancy rates remaining low at just 3.3%. Meanwhile Derwent is continuing to make progress with its major development programme under construction, of which 400,000 sq ft is due for completion by the second half of next year, with 66% already pre-let. An additional 620,000 sq ft is due for completion in 2019, including the Brunel Building in Paddington, central London.

In the second half of the year Derwent sold three properties for a total consideration of £130.1m, and on average these have been in line with June 2016 book values. But the company has admitted that the EU referendum introduced considerable market uncertainty, and together with the rise in Stamp Duty Land Tax in March, and recent confirmation of the higher business rates from April 2017, it has had a negative impact.

Derwent London has been operating as a Real Estate Investment Trust since 2007, but despite shareholder payouts being increased every year, the dividends have failed to keep up with the soaring share price, resulting in disappointing yields for income seekers. Derwent’s shares have looked expensive for quite some time, and at the end of 2015 the company’s was trading at 52 times actual earnings.

The prospective yield looks far healthier at the moment following this year’s share price slump, but at just 2% is still well below what I would expect from a property investment firm. In my view, there are plenty of other property investment firms out there with more modest valuations and healthier yields.

Premium valuation

Trading systems provider Fidessa Group (LSE: FDSA) is another mid-cap firm that has recently highlighted the uncertainty it faced as a result of the Brexit vote. However, the Woking-based software firm derives more than 60% of its revenue from outside Europe, and believes it remains well positioned to benefit from any continued weakness in sterling, providing further support for its strong cash generation and dividend policy.

The software group, which provides trading, investment and information solutions to the financial community, has seen little or no earnings growth over the last four years, and yet commands a premium valuation. And although market consensus suggests a return to growth this year, this will be no more than single-digits, and certainly not deserving of its high P/E rating of 28.

The post The most overvalued stocks in the FTSE 250? appeared first on The Twelfth Magpie.

More reading

• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has recommended Fidessa. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

In its most recent trading update the firm revealed that total revenue had risen 10% to £26.4m during the first quarter, compared to the same period the year before, with like-for-like revenue up 8% to £26m. There was also an improvement in average like-for-like achieved rent, up from £25.31 to £25.99 per sq ft. By the end of the first quarter, Big Yellow had 3.55m sq ft occupied, 7% higher than a year earlier, equal to 78% of the maximum lettable area. In my view these are excellent results, whichever way you choose to measure them.

More appealing valuation

Big Yellow Group has pioneered the development of the latest generation of self-storage facilities, making full use of state-of-the-art technology. Its storage facilities tend to be located in high profile and highly accessible main road locations, with the brand name now possibly the most recognised in the UK self-storage industry. The company has been operating as a Real Estate Investment Trust (REIT) since 2007 and shareholder payouts have been rising steadily every year since 2010, with further growth anticipated.

The company’s premium valuation may have put off some value-focused investors in the past. But after their recent slump the shares certainly look more appealing, with the earnings multiple falling to 18 and dividend yield rising to a healthy 4.5% for the year to March 2018. In my view, Big Yellow looks like a buy for income seekers after a progressive dividend as well as long-term investors seeking capital growth.

Turnaround in fortunes

It’s certainly been a tough few years for the world’s largest security company G4S (LSE: GFS), with the firm dropping out of the FTSE 100 index as well as being embroiled in a number of widely-publicised controversies, including the London Olympics and more recently its involvement with prisons in Israel. In 2014, Archbishop Despond Tutu along with others, penned an open letter to G4S, calling for it to end its work in Israeli prisons that detain children. Finally, after much international pressure, the firm revoked its contract with Israel. 

It looks like 2016 will be the year G4S finally turns things around. Indeed, after four years of decline, earnings are starting to rise, and last week the firm announced that it had won new contracts with annual revenues of £1bn and total contract value of £2bn since the start of the year. In spite of all its problems, G4S has been a very reliable payer of dividends, with payouts improving every year for the last 12 years. I think that if dividends can continue to grow in times of trouble, they can certainly continue to grow when things improve. Income seekers with a passion for rising dividends should certainly take a closer look at G4S, currently yielding 4%.

The post 2 ‘secret’ dividend shares you can’t afford to miss appeared first on The Twelfth Magpie.

More reading

• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Direct line has been steadily paying out special dividends over and above its ordinary dividend. With its full-year results announcement in March, the company said” “We’ve also continued to grow regular dividends and announced another special dividend“. The combination of an ordinary dividend of 9.2p per share plus a special dividend of 8.8p was actually eclipsed by a one-off extra cash payment of 27.5p per share as a result of the firm’s sale of its International division.

City analysts are forecasting a total dividend yield of 6.1% for the current year, rising to 6.2% for 2017, and that looks pretty attractive if Direct Line can pull it off. Cover by earnings would be thin at around 1.3 times and the company is assessing its solvency capital requirements, with approval for its model hoped to be received by mid-year. That adds risk, but Direct Line doesn’t anticipate any “step change” on that score.

The shares have had an erratic 12 months, up only 2.6% to 367p, but they’re still up 80% over five years and they’re on a forward P/E of only a little over 12 based on 2017 forecasts. Overall I see Direct Line shares as being close to fair value, but the company’s cash rewards strategy makes it look attractive to me from a long-term income perspective.

Invest in land?

If you want steady annual income, one option many overlook is buying shares in an investment trust. And if you think income from property is likely to remain healthy for many decades (as I do), the real estate investment trust (REIT) Land Securities Group (LSE: LAND) could be worth a look.

It’s actually the largest commercial property development and investment company in the country, and gets the bulk of its income from retail and office space rental. And its status means that, unlike some other kinds of investment company, it can even-out its dividend payments over the long term and provide a more stable income.

We’re not looking at one of the highest dividends in the FTSE 100, but averaging around 3% and a little higher on shares priced at 1,170p, they’re the kind that could provide you with steady income for decades to come.

An airline, really?

I’ve traditionally seen airline shares as a big no-no. Not that there’s any problem with the companies themselves, but it’s an industry at the mercy of costs and events it can’t control and offers little in the way of differentiation apart from price competition. The airlines can advertise their first-class luxury on telly, yet all I want is the cheapest seat that will get me to where I want to go.

But I’m actually quite impressed by easyJet (LSE: EZJ), especially after founder Stelios Haji-Ioannou led a shareholder revolt that forced the company to refocus on what matters and stop chasing expansion at all cost. What matters, of course, is long-term returns to shareholders. And along with impressively rising earnings, easyJet shares have been rewarding investors with ever-growing dividends.

With the shares currently at 1,462p, we’re looking at a forecast dividend yield of 4.5% this year, rising to 5.2% on 2017 predictions. An airline offering great long-term income potential? The world’s turned upside down I tell you!

The post 3 top dividends for the next decade: Direct Line Insurance Group plc, Land Securities Group plc and easyJet plc appeared first on The Twelfth Magpie.

More reading

• Could now be the time to buy great UK shares at bargain prices?
• easyJet shares are up 40% in a month. Here’s why
• Up close to 50% in a month, what’s next for the easyJet share price?
• The easyJet share price is up 49% in a month. What on earth’s going on?
• At £5, could the easyJet share price still be a long-term bargain?

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.