3 No-Brainer Sweet REIT Bargain Buys Yielding Up To 7%

Have you noticed the stock market hasn’t been so hot lately?

This perfectly normal correction in the S&P 500 (SP500) has people feeling gloomy because, for the first half of the year, it was a red-hot market.

After 13 years of Fed-induced “buy every dip” mentality, 2022 was a grisly nine-month period.

But off the October lows, things seemed back to “normal,” with big tech leading the way and nothing else matters.

The Fed does not cause corrections; they are healthy, ordinary, and necessary.

If you’re 28 years old or younger when you start investing, you’ll statistically live long enough to see a 50% market crash.

And once per generation, you’ll live through a 40% bear market.

How To Embrace Corrections Like A Sweetheart And Get Rich

Most people prefer stocks to go up and fear them falling.

This is a normal emotional response. Studies show it hurts twice as much to lose a dollar as make one.

But at the same time, when we buy a stock in a rising market, and then stocks keep rising, we feel both smart and richer.

This combination of loss aversion and FOMO, or fear of missing out, are the two cornerstones of the market fear and greed cycle that has existed since humans invented the stock market.

And they will always exist as long as human brains remain wired as they are.

By now you’ve probably heard of Buffett’s famous “be greedy when others are fearful.”

The reason that Warren Buffett is Buffett and the greatest investor of all time is that he can take those famous aphorisms and actually put them into practice.

Did you know that Berkshire Hathaway (BRK.A) has suffered three major crashes since Buffett became CEO?

The last one was in 2008, but I bet you didn’t realize that one was during the tech mania.

Berkshire stock fell almost 50% from July 1998 to February 2000. That’s when the Nasdaq was going parabolic, and many people were calling Buffett a washed-up has-been.

How would you feel owning Berkshire or something like dividend stalwart Realty Income or value stocks in general, as they spent month after month falling while the Nasdaq doubled and red hot names like Cisco Systems (CSCO) quadrupled?

And then this happened.

How would you have felt to own Berkshire when it was soaring or at least not falling while tech just fell and fell, year after year, after gut-wrenching year?

How about Realty Income which you locked in a 10% yield in 2000 and were minting dividends and which almost doubled while the S&P was cut in half, the Nasdaq fell 82% and former tech darling Cisco fell 86%?

Heck, Amazon (AMZN) fell 93% while value stocks as a group almost doubled.

Value and growth have been cycling for decades, and the reason they always will is the same reason that “this time is different” are the four most dangerous words in investing.

Bubbles last as long as they do because humans become used to certain trends and dream up plausible-sounding reasons they will continue.

Sometimes the reason is simply “because some greater fool will pay more.”

Citigroup’s CEO in 2007 famously said, “As long as the music is playing, you have to dance.”

5% To 7% Yielding Blue-Chip Bargains You Will Regret Not Buying Today

Vanguard Real Estate Index Fund ETF Shares (VNQ) now yields 5%, and Morningstar estimates that 5.8% long-term growth will deliver 10.9% long-term returns.

Unless you think the economy is about to implode (I can assure you it’s not), we’re 97% likely within 1% of the final bottom for real estate investment trusts, or REITs.

Not since March 2009, the darkest market in REIT history, have investors hated REITs this much.

I’ve spent weeks pondering why NOW is the time to buy REITs exactly because the charts are so ugly.

That’s better than the S&P 500’s 10.2% historical and expected future returns from a risk-free portfolio yielding 5.1% today, or 3X the S&P’s yield.

• risk-free because no diversified portfolio can go to zero outside of an apocalypse,
• in which case we’re too dead to care.

EVERYONE KNOWS that REITs can only fall because rates are high and REITs are a bond alternative.

Those articles explain in detail, with plenty of evidence, why REITs are not hurt by long-term rates going up in the long-term.

In the short term, anything can happen, but in the long term, 97% of stock returns are a function of yield, growth, and valuation.

In the short-term, luck is 20X as powerful as fundamentals, and in the long-term, fundamentals are 33X as powerful as luck.

That’s why I rarely call a bottom, except recently when I made the super high probability call of telling you that REITs are 97% likely to be within 5% of the final bottom.

REIT Corrections

REIT Bear Market	Peak Decline
1973 to 1974 (Interest Rates DOUBLE)	-34% (RIGHT NOW)
1990	-15%
1998-1999	-21%
2007-2008	-68%
2013	-14%
2015	-15%
2016-2017	-15%
Pandemic	-42%
2022-2023	-30%
Average	-28%
Median	-28%

Click to enlarge

Since the creation of REITS in 1960, it has always been a table-pounding great opportunity to buy REITS when they fell 28%.

Even if REITs fell lower, such as during the Pandemic and Great Recession, no one in history has ever regretted buying REITs after a 28% correction.

• unless they became forced sellers for emotional or financial reasons
• but that’s an error of risk management, not the REIT sector.

VNQ is the simplest and lowest-cost way to buy exposure to the entire equity REIT sector.

Historically REITs trade at 18X FFO (funds from operations), but today? 12.5X.

That’s a 32% historic discount on the utility sector for the entire economy.

I can pretty much guarantee that REIT sector assets will never perish as long as man walks the earth.

Everyone has to live somewhere, and so do all businesses.

If you are an income investor interested in REITs and you don’t buy right now in this bear market, you are doing it wrong.

If you think that REITs will keep falling unless rates fall? You are also mistaken.

Interest Rates Can Only Make REITs So Cheap

Year	Equity REIT Returns	Average 10-Year Treasury Yield
1972	8%	6.2%
1973	-16%	6.9%
1974	-21%	7.6%
1975	19%	8.0%
1976	48%	7.6%
1977	22%	7.4%
1978	10%	8.4%
1979	36%	9.4%
1980	24%	11.4%
1981	6%	13.9%
1982	22%	13.0%
1983	31%	11.1%
1984	21%	12.5%
1985	19%	10.6%
1986	19%	7.7%
1987	-4%	8.4%
12 Year Period	1061%	9.4%
Average Gains When REITs Were Rising	13.7%	8.7%

Click to enlarge

(Source: NAREIT.)

The last time REITs fell 34% outside of the Pandemic or Great Recession, and I fervently tell you that the financial system is not melting down right now, investors went on to make 12X their money in a decade.

While the S&P was flat.

The Last Time REITs Were This Hated And Cheap (March 2009)

Time Frame (Years)	Annual Returns	Total Returns	S&P 500 Annual Returns	S&P 500 Total Returns
1	111%	111%	56%	56%
3	43%	195%	26%	100%
5	30%	265%	23%	180%
7	24%	356%	17%	202%
10	18%	439%	17%	361%

Click to enlarge

(Source: Portfolio Visualizer Premium.)

REITs are not a fast-growing sector. You can’t earn Buffett-like returns with REITs unless you buy a few fast-growing ones OR buy them when everyone and their mother KNOWS FOR CERTAIN that REITs can only go down.

Smart investing is all about probabilities, and I can tell you with 97% statistical certainty that anyone buying VNQ right now for the long-term, to buy and hold for the long term, is going to be glad they did as long as they have a 5+ year time frame.

What Kind of profits can you expect with VNQ If You Buy Today?

• yield: 5.1%
• growth outlook (Morningstar): 5.8%
• long-term total return potential: 10.9%
• discount to fair value: 32% (Buffett-style “fat pitch” Ultra Value buy)
• 10-year valuation boost: 3.9% per year for a decade
• 10-year consensus 10-year total return potential: 14.8% CAGR vs 10.2% S&P
• 10-year consensus 10-year total return potential: 297% vs 164% S&P.

If REITs grow as Morningstar expects and return to fair value within ten years, those buying today will quadruple their money.

Are you willing to risk a 4X return on one of the most obvious slap you in the face Buffett-style blue-chip fat pitches of the last 14 years…to try to scalp an extra few % of lower cost basis?

Do you know what buying a stock 10% cheaper will do for your returns?

Boost total returns by 11%…not per year, but over the lifetime of the investment.

I’m trying to make you 300% returns in a decade, so if you want to risk blowing that for an extra 10%? Don’t miss out on a mega win trying to pick up a rounding error.

Here Are Two 7%-Yielding No-Brainer REIT Bargains

Now, let me show you two of Brad Thomas’s favorite REIT buys.

They are two of his top 5 REIT buy lists in his investing group’s Top Buy list.

Realty Income: The Fattest Pitch In Years For The Monthly Dividend Stock

Brad Thomas will be doing an article on the new Spirit Realty Capital, Inc. (SRC) acquisition, but here is the bottom line.

This deal is modestly accretive to AFFO/share immediately, and thus Realty Income Corporation (O) did not overpay.

The price was highly undervalued, but Realty is buying Spirit at a steeper discount.

• Realty Income AFFO yield: 9%
• Spirit Realty: 10.3%.

This appears to be a smart deal.

Even when its cost of capital is up significantly, Realty finds a way to quickly boost growth and become the 4th largest REIT in the world.

This will boost Realty’s property base by about 40% when the deal closes.

Realty is picking up around 550 industrial properties and will now own

• Retail
• Industrial
• Gaming.

I see nothing that justifies a 5% decline in Realty today.

Fundamental Summary (Why You Need To Buy Realty Today Or Live To Regret It)

• Yield: 6.6%
• Dividend safety: 97% very safe (1.15% dividend cut risk)
• Overall quality: 97% low risk dividend aristocrat
• Credit rating: A- stable (2.5% 30-year bankruptcy risk)
• Long-term growth consensus: 3.5%
• Long-term total return potential: 10.1% vs 10.1% S&P 500
• price: $46.28
• historical fair value: $75.77
• Discount to fair value: 39% discount (Ultra Value Buy) vs 1% overvaluation on S&P
• 10-year valuation boost: 5.1% annually
• 10-year consensus total return potential: 6.6% yield + 3.5% growth + 5.1% valuation boost = 15.2% vs 10.1% S&P
• 10-year consensus total return potential: = 312% vs 164% S&P 500.

Potentially quadruple your money in Realty Income in 10 years while earning Buffett-like returns over the next two years.

No human has ever regretted buying Realty at a 6.6% yield before, and I can say with 80% statistical certainty that today won’t be the first time.

VICI Properties: The Best Way To Profit From Casinos

• Time To ‘Bet Big’ On 6% Yielding VICI Properties.

Nothing that Brad and I wrote in this article has changed. The only difference is the deal is even sweeter for VICI Properties Inc. (VICI).

If you’ve ever been to Vegas, you know that what VICI owns is some of the top properties on the strip.

• Realty owns the Bellagio.

VICI’s claim to fame is that it collected 100% of rent during the Pandemic.

No other REIT in the world can claim this.

This REIT is fast-growing, highly undervalued, and hands down the best way for conservative income investors to invest in gaming.

Fundamental Summary

• Yield: 6.2%
• Dividend safety: 79% safe (2.3% dividend cut risk)
• Overall quality: 79% medium-risk SWAN
• Credit rating: BBB- stable (11% 30-year bankruptcy risk)
• Long-term growth consensus: 10.3%
• Long-term total return potential: 16.5% vs 10.1% S&P 500
• current price: $26.97
• historical fair value: $35.68
• Discount to fair value: 24% discount (strong) vs 1% overvaluation on S&P
• 10-year valuation boost: 2.8% annually
• 10-year consensus total return potential: 6.2% yield + 10.3% growth + 2.8% valuation boost = 19.3% vs 10.1% S&P
• 10-year consensus total return potential: = 484% vs 164% S&P 500.

VICI is one of the fastest-growing REITs, with incredible properties, rock-steady cash flow, and a weighted average lease duration of 43 years.

That’s contracted revenue for almost a half-century.

Buy These No-Brainer Sweet REIT Buys Or Live To Regret It

I understand how REIT investors are tired of the pain.

You just want to sell in disgust and swear off REITs forever.

You’re scared that rates will keep rising and that REITs will keep sliding for years.

But let me remind you what happened the last time interest rates doubled.

Interest Rates Can Only Make REITs So Cheap

Year	Equity REIT Returns	Average 10-Year Treasury Yield
1972	8%	6.2%
1973	-16%	6.9%
1974	-21%	7.6%
1975	19%	8.0%
1976	48%	7.6%
1977	22%	7.4%
1978	10%	8.4%
1979	36%	9.4%
1980	24%	11.4%
1981	6%	13.9%
1982	22%	13.0%
1983	31%	11.1%
1984	21%	12.5%
1985	19%	10.6%
1986	19%	7.7%
1987	-4%	8.4%
12 Year Period	1061%	9.4%
Average Gains When REITs Were Rising	13.7%	8.7%

Click to enlarge

(Source: NAREIT.)

REITs went up 7%, and REITs went up over 700%.

Do you think that at the bottom of that 34% REIT bear market, most people wanted to buy REITs?

Do you think the technical analysis looked positive?

The point is that if you want to “be greedy when others are fearful” this is how you do it.

You buy REITs right now.

You don’t wait, you don’t worry about the next day’s returns, or the next month or even the next year’s.

When Buffett pounded the table on US stocks, they had fallen 40%. That’s a sever bear market.

Buffett didn’t know if this was the bottom; he didn’t care. He knew a good deal when he saw it and pounded the table.

Stocks fell another 32% immediately after Buffett pounded the table.

Are you trying to change your life and retire in safety and splendor?

Or are you trying to market time and try to earn fast 10% or 20% profits?

Do you want to follow the example of the great investors in history?

Or do you want to try to get rich quick in day trading?

Hear me now, quote me later: anyone buying REITs today will be thrilled in 5+ years.