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3 Top-Ranked REITs for Dividend Investors to Buy for 2020

Benjamin Rains

The Dow, S&P 500, and Nasdaq all jumped to new intraday highs Monday on the back of the initial U.S.-China trade war truce. In other trade news, House Democrats last week announced their support for the new United States, Mexico, Canada Agreement to replace NAFTA.

On top of that, corporate earnings growth is projected to return in 2020 and U.S. unemployment rests at 50-year lows. Therefore, stocks could continue to climb in 2020. Still, it never hurts to strengthen your portfolio with some dividend-paying stocks, and Real Estate Investment Trusts are a great place to look.

REITs are companies that own, operate, or finance real estate properties that produce income, such as apartment complexes or retail locations. These companies are heavily regulated and must meet a number of qualifications to be classified as a REIT.

We should note that instead of earnings, REITs report funds from operations or FFO, but investors can view them as essentially the same for our purposes. Meanwhile, one distinct advantage is that REITs must pay at least 90% of their taxable income in dividends to shareholders. Clearly, this means REITs are great options for income investors.

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Now let’s dive into three highly-ranked REITs we found with our Zacks Stock Screener that dividend investors might want to buy heading into 2020…

Sun Communities, Inc. SUI

Sun Communities is a REIT that operates in the manufactured home and recreational vehicle communities space and boasts a portfolio of over 389 communities as of the end of September. SUI, which operates across the U.S. and in Ontario, Canada, saw its sales surge 13% during the first nine months of 2019.

Sun Communities shares have surged 46% in the past 12 months and 100% in the last three years to crush its industry’s roughly 20% climb during both stretches. Despite the strong run, SUI stock closed regular trading Monday at $151.86 per share, which marked a roughly 9% discount against its 52-week highs. On the technical side, SUI stock recently slipped below its 50-day moving average, which it has rarely stayed for long over the last three-plus years.

Our Zacks estimates call for SUI’s full-year fiscal 2019 sales to jump nearly 8% above 2018’s 14.7% revenue growth. The REIT’s 2020 revenues are then projected to climb 7.1% above our current-year estimate to reach $1.3 billion. At the bottom end, SUI’s core FFO is projected to jump roughly 7% above last year’s 10% expansion, with 2020 expected to come in another 9% higher at $5.32 per share.

Sun Communities’ positive bottom-line revision activity helps it earn a Zacks Rank #2 (Buy) at the moment. SUI also sports “B” grades for both Growth and Momentum in our Style Scores system and its REIT and Equity Trust – Residential industry rests in the top 31% of our more than 250 Zacks industries. And the firm’s dividend currently yields 1.96%, which comes in above the 10-year U.S. Treasury note’s 1.89%.

VICI Properties Inc. VICI

VICI Properties is a REIT that focuses on the gaming, hospitality, and entertainment space. The firm’s portfolio features “22 market-leading gaming properties,” which includes everything from Caesars Palace CZR in Las Vegas to golf courses and nightclubs. The New York-based company said on December 6 that it officially completed the previously announced acquisition of three regional gaming properties from Eldorado Resorts ERI and separately entered into a master lease agreement with Century Casinos CNTY.

VICI currently pays an annualized dividend of $1.19 per share, for a strong 4.89% yield. This payout looks even more impressive considering that it is not artificially inflated because shares of VICI have surged 31% in 2019 to outpace its industry’s 19% average. VICI stock closed regular trading Monday just off its 52-week highs at $24.61 a share. And its fiscal 2020 bottom-line revision activity helps VICI earn a Zacks Rank #2 (Buy).

The firm’s adjusted full-year FFO is projected to pop 3.5% to $1.48 per share, with its sales expected to slip 1% based on earlier declines since Q4’s sales are expected to climb over 3%. The firm’s Q1 fiscal 2020 revenue is projected to jump 13.5% from the prior-year quarter. VICI’s full-year 2020 sales are then expected to surge 27% to $1.13 billion to help lift the bottom-line by 12%.

Prologis, Inc. PLD

Prologis is a logistics-focused REIT that leases distribution facilities mostly to retail/online fulfillment and business-to-business clients. The firm operates in what it calls “high-barrier, high-growth markets” throughout 19 countries. The company, which has over 5,000 customers, topped our bottom-line estimates last quarter and its longer-term FFO revision strength helps PLD hold a Zack Rank #1 (Strong Buy) right now.

Prologis operates in a market that looks poised to grow for years to come in the Amazon AMZN and e-commerce age. PLD stock has surged over 50% in 2019 and roughly 110% during the past five years to destroy its industry’s 11% average climb. Prologis also rocks a “B” grade for Momentum in our Style Scores system and it holds a 2.41% dividend yield.

PLD announced at the end of October that it entered into a definitive merger agreement with Liberty Property Trust LPT that will help it expand in target markets including Chicago, Houston, and Southern California. Peeking ahead, PLD’s full-year sales are projected to jump 19%, with 2020 expected to come in over 13% higher at $3.21 billion. And Prologis FFO is expected to climb 9.3% this year and another 10.3% in 2020.

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Century Casinos, Inc. (CNTY) : Free Stock Analysis Report
 
Caesars Entertainment Corporation (CZR) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Eldorado Resorts, Inc. (ERI) : Free Stock Analysis Report
 
Sun Communities, Inc. (SUI) : Free Stock Analysis Report
 
Liberty Property Trust (LPT) : Free Stock Analysis Report
 
Prologis, Inc. (PLD) : Free Stock Analysis Report
 
VICI Properties Inc. (VICI) : Free Stock Analysis Report
 
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