Undiscovered Gems: Strong Fundamentals in REITs, January 2025

As we step into 2025, investors are presented with an opportunity to explore the real estate investment trust (REIT) sector, which has shown resilience and growth potential despite market fluctuations. In this article, we will delve into the fundamentals of seven REITs yielding between 10.4% and 15.3%, highlighting their strong performance and growth prospects.



1. Community Healthcare Trust (CHCT)
- Yield: 15.3%
- CHCT has a strong track record of dividend growth, with 37 consecutive quarters of increases. Its focus on healthcare properties, such as senior housing and medical office buildings, provides a stable income stream.
- However, CHCT's funds from operations (FFO) have dipped below 2020 levels, which could potentially tighten its dividend coverage in the short term.

2. Global Medical REIT (GMRE)
- Yield: 15.1%
- GMRE has an occupancy rate of 96%, indicating strong demand for its properties. However, it has faced challenges with tenant bankruptcies, which have impacted its share price.
- With a tight payout ratio of 93%, GMRE must grow its AFFO to maintain its dividend.

3. Innovative Industrial Properties (IIPR)
- Yield: 12.5%
- IIPR has maintained a high occupancy rate of 99.5% and has a strong focus on the growing cannabis industry, which could provide long-term growth potential.
- Its 5-year EPS growth rate of 35.5% and 5-year revenue growth rate of 32.7% compare favorably to the broader market's growth rates.

4. LTC Properties (LTC)
- Yield: 11.9%
- LTC is a self-managed REIT focused on senior housing and assisted living facilities. Its strong balance sheet and experienced management team have contributed to its success.
- However, LTC's dividend payout ratio is high, which could pose a risk to its dividend sustainability.

5. Savanna (SVAN)
- Yield: 11.7%
- Savanna is a self-managed REIT focused on office properties in major markets. Its strong occupancy rates and tenant retention have driven its success.
- However, Savanna's high dividend payout ratio could pose a risk to its dividend sustainability.

6. Southeast Industrial Properties (SIE)
- Yield: 11.5%
- SIE is a self-managed REIT focused on industrial properties in the Southeast region of the United States. Its strong occupancy rates and tenant retention have driven its success.
- However, SIE's high dividend payout ratio could pose a risk to its dividend sustainability.

7. Stag Industrial (STAG)
- Yield: 10.4%
- STAG is a self-managed REIT focused on industrial properties in the United States. Its strong occupancy rates and tenant retention have driven its success.
- However, STAG's high dividend payout ratio could pose a risk to its dividend sustainability.



In conclusion, these seven REITs offer significantly higher income potential compared to the broader market, with strong dividend growth track records and high occupancy rates. However, they also face challenges such as tight dividend coverage and tenant bankruptcies. Their growth potential and valuation metrics compare favorably to the broader market, but their balance sheet strength is relatively weaker. As investors seek income and growth in 2025, these "undiscovered gems" in the REIT sector deserve consideration.