When it comes to Real Estate Investment Trusts (REITs), there’s a multitude out there. Some buy up health centers while some focus on shopping malls. One thing that all of these REITs have in common is that they must distribute 90% of their taxable income to investors.
These REITs are publicly traded, which means we can get our hands on these juicy 90% payouts while holding a diversified bundle of real estate.
Finding the right REITs
With a huge variety of REITs out there, you’ll have just about as hard a time as buying stocks. I decided to go out there and find some of the coolest REITs, including some strange ones, to report on for the Fool community.
I have for you a timber investment company, a college campus investment company, and one of the highest yielding REITs out there. Let’s take a look at them all.
High yielding
American Capital Mortgage Investment Crp (NASDAQ:MTGE) is a very appealing company due to its great track record in producing the best returns from its assets. The company also has one of the best management out there in the hybrid mortgage REIT category. Those managers have also been busy buying the company’s stock, something they’d only do if they saw promise.
The company’s sales in 2012 were $145 million. That’s a big leap above the $16.41 million they saw in 2011. Those sales were generated on almost $7.7 billion in assets. Take away the liabilities, and this company had a book value of right around $1 billion at the close of their fiscal 2012 year.
There are five analysts covering this REIT, and four of them give it a ‘strong buy’ rating. The other analyst has left the company at a ‘buy’, meaning that the mean recommendation on this stock is a solid 1.2.
Trees!
Plum Creek Timber Co. Inc. (NYSE:PCL) is among the nation’s largest landowners. It uses all the land it acquires to grow and harvest timber, which is then sold and a dividend is paid out.
That dividend will yield holders a solid 3.2%. I know, I know, it isn’t anywhere near the 14% that American Capital Mortgage Investment Crp (NASDAQ:MTGE) is promising, but that doesn’t mean that this REIT isn’t worth it.
Plum Creek Timber Co. Inc. (NYSE:PCL) actually manages to sell over $1 billion in timber per year. This nets the company somewhere around the $200 million range. Sales in 2012 were $1.34 billion, and net income was $203 million.
With more than 6.4 million acres under management, this company is a secure one. Consumers have been using timber for centuries, and without any major technological breakthrough, I’d expect them to continue to do so. Plum Creek Timber Co. Inc. (NYSE:PCL) is appropriately positioned to continue to harvest and sell their timber, and you can enjoy the gains for years to come.
Colleges
Every year, thousands of new high school grads leave home and head off to college. Throughout their four years there, they’ll likely end up at one of American Campus Communities, Inc. (NYSE:ACC)’ many properties.
American Campus Communities runs a variety of student housing properties all around the country. There’s a good chance that you’ve at least seen one of their properties if you’ve been around some of the nation’s colleges over the last decade.
Having seen some of the properties myself, I can confirm that they are among the best, and students like living in them. If you like owning them, you can hop aboard now. This company will pay you a 3% dividend yield for holding on, but you should be warned about the incredibly high P/E ratio.
That P/E ratio is among the highest out there for any type of REIT, and will likely throw many of you away from the path of this company. At 74.2 times trailing earnings, I really couldn’t blame you.
Investor takeaway
I would definitely consider buying American Capital Mortgage Investment Crp (NASDAQ:MTGE) and Plum Creek Timber Co. Inc. (NYSE:PCL). Both these REITs have their advantages over the rest of the market as American Capital comes with excellent management and Plum Creek Timber owns a lot of land, something that can’t ever be duplicated.
American Campus Communities will obviously be a choice for investors getting in the game over the long-term. It will likely take some time before you’ll be able to make ground on that outrageous P/E ratio, and I don’t think a massive sell off will be coming in the space anytime soon.
The article 3 REITs to Bolster Your Portfolio originally appeared on Fool.com and is written by Ash Anderson.
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