7 Top REITs for Growth and Income in a Low Interest Rate Environment

With interest rates now expected to remain low, investor interest in rate-sensitive stocks have increased. Indeed, several leading investment experts and contributors to MoneyShow.com have reiterated buy recommendations for some favorite real estate investment trusts. Tom Hutchinson, Cabot Dividend Investor There are a lot of good REITs to buy in the current market environment. Not only do they offer a high degree of safety and income in an uncertain market, they should get a boost from the Fed's dovish stance on interest rates. REITs also enjoy a special tax exemption provided they pay 90% of profits, after expenses, out to shareholders in the form of dividends. Here's two perfect real estate investment trusts to consider in a low interest rate environment. STORE Capital is an under-the-radar REIT operates in the retail space. That may seem like a bad idea right now. Aren't bricks-and-mortar retailers closing like crazy? Yes, but this well-run REIT is actually benefiting from the shifting retail environment. Its properties tend to be located in the more popular, contemporary strip malls and city/mall combination spaces, not in the dying indoor malls. As well, STORE's tenants are those that don't compete with the Internet. The REIT also has a good formula for the current environment in that leasing saves the lessee money. They don't have to shell out upfront cash and be in the real estate business. STORE capital primarily uses triple net leases, where the lessee pays all the expenses and maintenance. Most contracts are 15 years or longer and the REIT has a nearly 100% occupancy rate. Performance has been stellar, as the REIT has consistently outperformed both its peers and the overall market. STORE Capital is also a favorite of Warren Buffett. As well, the stock has strong down market credentials as it barely budged during the December selloff. The stock pays a dividend of 3.7% and should continue to thrive. Realty Income is perhaps the most well-known REIT in the country. It's been around since 1994 and has returned an average of 16.9% per year since, blowing away the returns of its peers and the overall market. This REIT has been such a great performer and reliable monthly dividend payer that is has the hubris to call itself The Monthly Dividend Company. It has paid dividends for 586 consecutive months and raised that dividend for 86 consecutive quarters at an average 4.6% annual rate. It has primarily used the same formula as STOR with low expenses and predictable triple net lease agreements. The REIT portfolio is in 49 states with over 5,800 properties under long-term net lease agreements. It has 261 commercial tenants and 48 retail and other tenants. It currently pays a 3.8% dividend, and the payout will most certainly increase. Brit Ryle, The Wealth Advisory MGM Growth Properties LLC is a REIT that engages in the acquisition, ownership, and leasing of large-scale destination resorts with amenities such as casino gaming, hotel, convention, dining, entertainment, and retail offerings. The real estate investment trusts currently owns a portfolio of properties, consisting of 11 premier destination resorts in Las Vegas and elsewhere across the United States. MGM is looking to buy Wynn's Encore Boston Harbor, and MGP will play a supporting role in closing that deal. The casino is already pulling in gamblers, and it's in a prime location for tourism. Plus, it would give MGM/ MGP two of the newest casinos in the state. Gaming and betting are on the rise in the U.S. and around the world. MGP has access to some of the most profitable properties on the market thanks to its connection with MGM Resorts. Every casino it adds to the portfolio is a dividend increase for us. MGP is our newest REIT recommendation. And it's already paying us income. Plus, I see some strong momentum ahead. I rate I recommend purchase anywhere under $35. The 12-month price target is $45. Jon Markman, Pivotal Point Crown Castle International is a real estate investment trust. If you're operating a cell phone in the United States, you probably depend on its infrastructure. It's the largest operator of cell phone towers and small cell networks supported by fiber in the country. It completely dominates the segment with 40,000 towers and 87,500 miles of fiber. And the company is only getting started. Most people believe opportunities for growth are limited when you're on top of the heap. That is one way to look at things. Another is to press your economies of scale, and get even bigger, more dominant, and lift prices. The Houston-based company has been around since 1994, but in 2007, managers began to focus on the things the company really does well. It doubled down on its U.S. business and began to aggressively expand its footprint, and leverage. Crown Castle still gets about 84% of its revenues from AT&T , T-Mobile , Verizon and Sprint . That is not a bad thing. Tower infrastructure is limited. And building small cell networks, like radio equipment perched on city streetlamps and tall buildings, is less fragmented than you might think. Crown is dominating there, too. Sales reached $5.35 billion in 2018, a 25% increase year over year. Crown also raised guidance for 2019, and the dividend yield is 3.5%. The stock has also been a big winner, rising 20% in 2019, and 50.5% during the past three years, excluding dividends. Investors who want exposure to the next wave of wireless should consider the shares. Tim Plaehn, The Dividend Hunter New Residential Investment has dropped in recent weeks, pushing the yield up to an attractive 12.5%. The stock price is down on the fears that lower interest rates will lead to massive mortgage refinancing, which will hurt New Residential's returns from its mortgage servicing rights investments -- MSRs. My thoughts are that the share price drop has put the REIT on sale. Over the last few years NRZ has broadened its reach into the residential mortgage business to be able to profit from the full spectrum and cycle of home loans. I expect that management will have a strategy to profit from the recent decline in interest rates. I am also not convinced that the ultra-low rates of the last two months are the new long-term outlook. Sentiment could turn quickly and the drop in the 10-year Treasury yield could quickly reverse. If you look at the success, profitability and dividend growth of New Residential, there is a good case this should be a $20 stock. Previous dips in the value have been good times to add shares and I believe this is another one. Buy or add shares up to $16.00 to lock in a 12.5% yield. John Freund, BullMarket Report JBG Smith Properties is a $6 billion REIT that invests in both commercial and multifamily real estate. The company is the most active developer in the Washington, D.C. area, with over 60 commercial and multi-family properties. The big story with JBG is the company being the primary landlord for the National Landing area, owning 6 million square feet there. Washington, D.C. is one of the hottest real estate markets in the U.S. National Landing houses both the Pentagon and Potomac Yard. What makes National Landing especially attractive is the November 2018 announcement that Amazon will be its newest tenant. Over 25,000 new employees are expected, which could lead to 100,000 new residents over the next several years. Think restaurants, retail, fitness centers, and whatever else the wealthy tech elite spend their money on. Management just raised $470 million after a 10 million share offering. That spooked some investors, who typically don't like it when a company issues shares to raise money. That's understandable. But if you think about it, now is the perfect time for management to get aggressive. They've got the wind at their backs after the Amazon deal, so why not raise half-a-billion and make some moves in an increasingly hot real estate market? We're not investing in JBG for the short term. We believe in the REIT's long-term prospects, especially after the Amazon deal. Management has a decades-long track record of success, so we're confident they'll put this $470 million to use wisely. Expect the stock to continue its upward trajectory well into 2020. Bob Carlson, Retirement Watch In U.S. markets, real estate investment trusts (REITs) continue to be leaders. This remains a good economic environment for REITs, and we own them through one of the leading funds. Cohen & Steers Realty Shares is up 3.52% over the last four weeks 23.19% for the year to date. CSRSX first develops an outlook for the economy. Then, it determines how that forecast will affect different commercial real estate sectors. Finally, Cohen & Steers uses its deep knowledge of REITs to select those most likely to benefit from the outlook and own quality properties, have quality management and sell at reasonable prices. The fund tends to focus on relatively few REITs. It recently owned 50 REITs and had 50% of the fund invested in its 10 largest positions. The top positions in the fund were American Tower , Equinix , Welltower , UDR and Prologis . Top REITs sectors in the fund were apartments, infrastructure, data centers, health care and self-storage. We also own both REITs and preferred securities through Cohen & Steers REIT & Preferred Income . The exchange-traded fund is up 4.78% in the last four weeks and 25.88% for the year to date. The yield is 6.85%. The fund is about evenly split between REITs and preferred securities. In addition, the fund largely mirrors the holdings of Cohen & Steers funds dedicated to those investments. The fund uses about 24% leverage. It recently sold at a 7.65% discount to net asset value, which is down from the 10.09% six-month average discount.

7 Top REITs for Growth and Income in a Low Interest Rate Environment

These names offer a high degree of safety and income in an uncertain market, and should get a boost from the Fed's dovish stance on interest rates.

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