Foolproof Your Portfolio With These 3 REITs

Foolproof Your Portfolio With These 3 REITs

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Real estate investment trusts or REITs can offer investors sitting on the fence a viable approach to the market. Simply put, the structure of these businesses requires them to distribute the majority of their taxable income to shareholders. These dividends can provide support during periods of ambiguity, such as right now.

Another factor that helps REITs rise above other asset classes is liquidity. Owning physical real estate – while it may be considered the king of investments – represents an illiquid asset. However, REIT shares are publicly traded, allowing investors to buy and sell with ease.

Finally, REITs offer diversification. With these entities covering multiple sectors, you can expand the breadth of your holdings easily. On that note, below are some compelling ideas to foolproof your portfolio.

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Public Storage (PSA)

a Public Storage sign in front of a facility of storage buildings
a Public Storage sign in front of a facility of storage buildings

Source: Ken Wolter / Shutterstock.com

One of the more popular REITs, Public Storage (NYSE:PSA) is the largest of the real estate trusts in its core business of self-storage services in the U.S. Fundamentally, the company should benefit from increased storage demand. In particular, with housing costs soaring, people can elect to downsize, putting their bulky possessions in storage while attempting to secure cozier (and thus cheaper) living situations.

In the market, PSA stock hasn’t exactly resonated with investors. Since the start of the year, shares lost 9% of market value. In the past 52 weeks, they’ve gone nowhere, shedding 4%. On the other hand, analysts believe that the current fiscal year should lead to sales of $4.63 billion, up 2.5% from the prior year. Also, in 2025, revenue may land at $4.85 billion.

To be fair, Public Storage isn’t the cheapest name among REITs. However, it’s consistently profitable, thus facilitating a forward dividend yield of 4.23%. Lastly, analysts rate shares a consensus moderate buy with a $305.08 price target, implying over 7% upside potential.

Realty Income (O)

realty income logo highlighted by a magnifying glass on a web browser
realty income logo highlighted by a magnifying glass on a web browser

Source: Shutterstock

One of the most commonly discussed REITs, Realty Income (NYSE:O) invests in free-standing, single-tenant commercial properties in the domestic market. As well, it features similar investments in Spain and the U.K. A major plus that benefits O shareholders is that Realty pays a monthly dividend. This way, investors can more frequently reinvest their earnings, among other benefits.

Fundamentally, Realty should rise over the long run from everyday relevance. Unless you envision a future where pharmacies, groceries and consumer goods retailers would become obsolete, you can trust O stock. Further, the company’s forward dividend yield stands at 5.91%. Not only that, it enjoys 31 years of consecutive payout increases. That’s a status Realty won’t give up cheaply.