REITs in Focus: High Yields, Potential Risks, and Market Revival

Rotation Bargains: 2 High-Yield Dividend Stocks With Double-Digit Return Potential

Looking for more investing ideas like this one? Get them exclusively at iREIT® on Alpha. Learn More " Introduction A few days ago, I wrote an article on potential "Trump trades" in case the former president wins in November. Initially, I wanted to use this article to share my thoughts on potential "Biden picks." However, as most of you will be aware, the sitting president decided to drop out of the race, endorsing his Vice President, Kamala Harris, as the perfect pick to take on Donald Trump, who is currently expected to win, according to PredictIt numbers. Hence, while I rethink my "Democrat trades" strategy, I decided to ditch politics for a moment and focus on another major theme we have been discussing almost this entire year: the market rotation. As we can see in the chart below, the biggest ten S&P 500 holdings accounted for 37% of the total value at the start of this month. Most of these companies were "tech stocks," which turned the market into an AI proxy. Although I'm painting with a very broad brush here, my main point is that the S&P 500 became too top-heavy, which created a new set of risks. Now, the market seems to be rotating, which comes with tremendous opportunities. Hence, in this article, I'll update my thesis and present three dividend (growth) stocks that I consider to be undervalued and terrific picks for the years ahead. So, let's get to it! A Rotation Of "Historic Proportions" While I would make the case that we're still in the early stages of a rotation, the more "mainstream" media has caught up, as The Wall Street Journal just published an article titled A Stock-Market Rotation of HHistoric Proportions Is Taking Shape. One of the first paragraphs stood out to me (I added emphasis): Few investors saw the shift coming, and many are puzzled by what is behind it: Changing forecasts for Federal Reserve interest-rate cuts? Expectations that Donald Trump will return to the White House? A technology trade that grew precariously crowded? - The Wall Street Journal I have to say, I'm a bit proud that we saw it coming before "everybody else" did. However, I also have to admit that I underestimated the strength of the "tech trade" that started more than one year ago. That was one of my biggest mistakes since I started investing. Besides that, as we can see below, the rotation is still young. Taking a victory lap now would be like expecting to win a game after a first-inning single home run puts you up 1-0. The good news is that the thesis has legs. For example, after the most recent inflation release, investors started to trim their winning bets on tech, which has been one of the best places to bet on slowing inflation rates. Now, the risk/reward has turned sour, as the bet on the Fed being able to cut rates has gone mainstream. Moreover, "everyone" is bullish on AI. While that technology will remain relevant, it's hardly a secret on Wall Street. Meanwhile, the trade that bets on broadening market strength and earnings has a much more attractive risk/reward, supported by the potential that a Trump victory could come with lower corporate taxes, a stronger domestic manufacturing base, and fewer regulations. Even if we exclude these potential tailwinds, the market expects broadening economic strength, with outperforming 2025 earnings growth in a wide range of non-tech sectors, including healthcare, materials, consumer discretionaries, and industrials. In 2024, growth is expected to mainly come from communication services and information technology (both are "tech" sectors). If the Fed manages a soft landing with a path to lower rates, especially smaller companies and cyclical players could start to do really well. "Earnings growth is going to be a crucial factor in determining whether this trend will continue -- earnings growth of smaller names and earnings growth of the large-cap tech companies," said Sumali Sanyal, senior portfolio manager of systematic global equities at Xponance. Smaller companies tend to be more vulnerable than big ones to high interest rates. Thirty percent of the debt of the Russell 2000 is floating-rate, compared with 6% for the S&P 500, according to Goldman Sachs research from earlier this year. Historically, unprofitable companies make up a large chunk of the Russell 2000. - The Wall Street Journal Meanwhile, investors are throwing billions at hedging trades. Bloomberg reported that demand for "tail-risk-hedges" has risen so much that hedging costs are at the highest level since August 2023. At the same time, demand for call options on the small-cap Russell 2000 has skyrocketed. This comes after two consecutive weeks where the equal-weight S&P 500 has outperformed the market-weighted S&P 500. Historically, interest-rate cuts have ushered in strong stock-market returns -- but only for cycles that aren't triggered by a recession, like this one. Easing cycles tended to spur gains in rate-sensitive groups like utilities, staples and health care. - Bloomberg (emphasis added) This brings me to the two picks of this article. Both are dividend (growth) stocks with attractive business models. Both have strong balance sheets. Both have attractive dividend yields. Both are trading far below their "fair" values. Although the trajectory of the rotation is far from certain, I believe these stocks bring the qualities to the table that make them likely to outperform on a long-term basis. Rexford Industrial Realty (REXR) - 3.4% Yield If this were a talk show, Rexford Industrial Realty would be a recurring guest, as I have mentioned the stock in a number of prior articles as well. When it became "cheap" after the sell-off in bonds and the general surge in rates after 2021, the stock popped up on my radar, as I believe it offers tremendous value in the real estate sector. Moreover, because it just released its earnings, we have a fresh batch of data and comments to work with. Rexford is an industrial REIT operating in Southern California's infill markets, a market that has a number of benefits, including constrained supply (it's hard to build due to geographic and zoning issues), a massive consumer market, a strong industrial base, and two of the largest ports in the U.S., Los Angeles, and Long Beach. According to the company, the infill market offers superior tenant demand fundamentals and substantial opportunities for value addition. Unlike the "big box" market with buildings ranging from 250 thousand to more than 1 million square feet, Rexford's average space size is 26 thousand square feet, allowing it to target a more stable tenant base that is less affected by economic cycles. Moreover, while total availability rates are increasing in the industrial real estate sector, SoCal's infill markets remain extremely attractive, with low availability rates and subdued supply growth. Despite cyclical weakness, the company's same-property portfolio occupancy increased by 70 basis points to 97.3% in the second quarter, which is terrific news. Consolidated net operating income ("NOI") rose by 21%, while funds from operations ("FFO") per share increased by 11% compared to the prior-year quarter. The company also benefits from value-creation opportunities, as more than 1 billion square feet of buildings in its target market were built before 1980. As the average lifespan of a commercial building is 50-60 years, these buildings now enter the sweet spot for value creation (it also explains why I'm bullish on building product distributors). In general, over the next three years, Rexford expects its cash NOI to grow by $229 million (35%), mainly driven by these value-adding initiatives and mark-to-market rent adjustments. It also has a stellar balance sheet. With a net debt to EBITDA ratio of 4.6x, the company believes it is well-positioned to capitalize on accretive opportunities. At the end of the second quarter, the company had almost $2 billion in total liquidity, including $830 million from forward equity proceeds and a $1 billion revolving credit facility. This is rewarded with a BBB+ (or equivalent) credit rating from S&P, Fitch, and Moody's. In the years ahead, I would not bet against a bump to an A-range rating. With regard to its dividend, the stock is yielding 3.4%, backed by a 71% payout ratio. It has a five-year CAGR of 18%. Although I cannot make the case that the dividend will continue to grow at 18% per year, I believe elevated dividend growth is likely, as the company's growth outlook is fantastic. Using the FactSet data in the chart below, REXR is expected to grow its adjusted per-share FFO by 11% this year, potentially followed by 15% growth in both 2025 and 2026. Since its IPO in 2013, it has had a normalized P/AFFO multiple of 35.2x. While I would make the case that this multiple no longer reflects its growth potential, even a 25x multiple - in line with its largest peer, Prologis (PLD) - would suggest an annual return potential of more than 14%. Pick number two has a higher yield and less growth but an even more important business model. TC Energy (TRP) - 6.8% Yield This Canadian company is one of the largest midstream companies in the world. It is taxed as a C-Corp. My most recent in-depth article on this giant was written on May 8, when I called it a potential takeover target for Warren Buffett. The company, which is working on spinning off its liquids pipelines and storage business through a new company called South Bow, owns roughly 58 thousand miles of pipelines and more than 650 billion cubic feet of natural gas storage. These assets support the production and takeaway of natural gas in major areas like the Western Canadian Sedimentary Basin and the Marcellus Basin in the Appalachia region. Both of these basins are world-leading places for natural gas production. Moreover, most of its income is either regulated or under long-term contracts, which gives it utility-like safety in an industry with secular growth tailwinds. Currently, TC Energy and its peers benefit from a number of tailwinds, including elevated natural gas production, strong demand, favorable export markets, and the fact that most have mature assets, which creates favorable free cash flow. In the first quarter, TRP reported an 11% increase in EBITDA compared to the same quarter last year. This growth was driven by record utilization rates, including high demand and operational efficiency in its natural gas and power businesses. Additionally, the power segment experienced a 14% increase in comparable EBITDA, while the liquids business saw a substantial 28% increase. It's also further capitalizing by investing in strategic expansions. So far this year, the company has placed roughly C$1 billion of projects into service, including its $300 million Gillis Access project. Moreover, TC Energy continues to progress with major projects like the Southeast Gateway and Bruce Power Unit 3 MCR. Meanwhile, it is selling non-core assets, including the Portland Natural Gas Transmission System, which is part of its C$3 billion divestiture target for this year. Thanks to prudent financial management, the company sees a clear path to achieving its financial targets, including a leverage ratio of 4.75x by the end of this year. 92% of its debt has a fixed rate with a weighted average coupon of just 5.3%. With regards to its dividend, the South Bow spinoff is expected to keep the total dividend unchanged, as TRP shareholders will get stock in both TRP and South Bow. The dividend is expected to grow by 3-5% per year and has been hiked for 24 consecutive years, including the Great Financial Crisis, the 2014/2015 oil price crash, and the pandemic. Currently, TRP pays C$0.96 per share per quarter, which translates to a yield of 6.8%. For non-Canadian investors, withholding taxes may apply. Currency risks apply to all foreign investors. Unfortunately, although this is an attractive yield, both Toronto and New York-listed TRP shares have been somewhat disappointing over the past ten years. Including dividends, they have returned just 75% and 36%, respectively. Going forward, I expect the company to perform much better, supported by a highly favorable valuation. Trading at a blended P/OCF (operating cash flow) ratio of 7.6x, the company trades below its long-term average of 8.2x. A return to that number by incorporation of mid-single-digit annual per-share OCF growth paves the road for a C$68-C$70 stock price target, 22% above the current price. When adding its juicy dividend, we get a highly favorable total return outlook of roughly 14% per year. This applies to New York-listed shares as well, with the exception of currency risks. Moreover, while all of these numbers are theoretical, I'm very upbeat about the future of TRP, its ability to create post-spin-off value, and its total return picture. Takeaway The market rotation presents us with significant opportunities, especially as the S&P 500 has become top-heavy with tech stocks. With this shift, I'm looking for undervalued dividend growth stocks that are poised for long-term gains. Rexford Industrial Realty stands out due to its strategic positioning in Southern California's infill markets, as it offers stable tenant demand and impressive growth potential. Meanwhile, its strong balance sheet and attractive 3.4% yield further support its appeal. TC Energy, with its extensive midstream assets and reliable income from regulated and long-term contracts, also caught my attention. Despite past underperformance, its high yield and promising growth outlook make it a solid pick. I believe both stocks are well-positioned to benefit from current market dynamics, making them compelling picks for the years ahead. Test Drive iREIT© on Alpha For FREE (for 2 Weeks) Join iREIT on Alpha today to get the most in-depth research that includes REITs, mREITs, Preferreds, BDCs, MLPs, ETFs, and other income alternatives. 438 testimonials and most are 5 stars. Nothing to lose with our FREE 2-week trial. And this offer includes a 2-Week FREE TRIAL plus Brad Thomas' FREE book. Leo Nelissen is an analyst focusing on major economic developments related to supply chains, infrastructure, and commodities. He is a contributing author for iREIT® on Alpha. As a member of the iREIT® on Alpha team, Leo aims to provide insightful analysis and actionable investment ideas, with a particular emphasis on dividend growth opportunities. Learn More. Analyst's Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

An Important Warning For REIT Investors

Looking for a portfolio of ideas like this one? Members of High Yield Investor get exclusive access to our subscriber-only portfolios. Learn More " Real estate investment trusts (REITs) (VNQ) have been among the worst-performing sectors since the Federal Reserve started raising interest rates aggressively in early 2022. Over that period until the beginning of November 2023, they had lost nearly one-third of their value on aggregate. However, since then, due to signs of moderating inflation and a growing consensus that the Federal Reserve is likely going to cut interest rates sooner rather than later, REITs have staged a fairly substantial recovery. They are now up 25% over that period. Additionally, the consensus is that REITs should continue to soar higher as the Fed cuts interest rates. However, it is important to keep in mind that the REIT sector is far from being out of the woods right now. While I am bullish on REITs in general, investors should continue to be highly selective in which REITs they buy right now. REIT Sector Lingering Headwinds The REIT sector continues to deal with several headwinds. The main one is that the yield curve is steeply inverted; therefore, short-term interest rates will need to come down significantly more than long-term interest rates to create a more balanced interest rate environment. While falling short-term rates should help REITs some, REITs are generally much more sensitive to long-term interest rates. This is for two reasons. First, much of their debt is typically financed on a medium- to long-term basis. Whether it be mortgage debt or corporate bonds, the interest expense for REITs is typically more closely tied to where long-term rates sit than short-term rates. Additionally, many REITs, especially triple-net lease REITs such as Realty Income (O) and NNN REIT (NNN), are typically viewed as bond proxies due to their long-dated, consistent, and attractive cash flows. Therefore, their valuations are often priced based on where long-term interest rates are. What this means is that just because the Fed is likely to cut rates in the near term does not necessarily mean that REITs are likely to experience reduced interest expenses or receive higher valuations from the market. What matters is where long-term rates go, and it is unlikely that long-term interest rates are going to fall significantly anytime soon. Therefore, the interest rate relief for REITs will likely be muted. Another reason to be highly selective about REITs right now is that the economy is weakening, and it appears that we are increasingly likely headed for a stagflation environment in the near term. This is because inflation, while moderating, is remaining pretty sticky and is expected to remain above the Fed's 2% target for quite a while to come. This is due to deglobalization of supply chains, the growing likelihood of significant increases in tariffs in the United States and potentially Europe in response to Chinese oversupply and predatory pricing practices, and heavy investments in AI. These are likely to be inflationary rather than deflationary in the upcoming years. This is because the infrastructure build-out and R&D in AI products are going to absorb a lot of capital while yielding little in the way of deflationary new products for at least a few years. Additionally, massive deficit spending by governments, especially in the United States, is inflationary and will likely get even worse due to the brewing global arms race. Meanwhile, the economy is weakening and likely to continue weakening, as evidenced by rising unemployment over the past year, now around 4%. Consumer confidence and spending are weakening, and major global trade partners of the United States, including China, much of Europe, and Japan, are experiencing economic challenges. Moreover, the yield curve is sharply inverted, often an indicator of a coming recession, and corporate and personal debt levels are very elevated. My Favorite REIT Sectors In July 2024 Given this backdrop, investors in REITs need to be cautious of investing in REITs that are highly economically sensitive and those that do not enjoy strong inflation protections. As a result, one of my favorite places to invest right now is finding value opportunities in multifamily REITs, especially those with a Class B focus. These REITs tend to be more defensive, and their short-term leases make them a better hedge against a higher-for-longer inflationary environment. I like Mid-America Apartment Communities (MAA) among several other opportunities in the multifamily space right now for several reasons. First and foremost, it has a strong balance sheet with an A- credit rating and an impressive long-term track record of generating 10.2% annualized total returns over the past decade. Meanwhile, its expected five-year FFO per share CAGR is nearly 7%, which combines with its 4.1% dividend yield to provide investors with a roughly 11% annualized total return even without accounting for valuation multiple expansion. It trades at a 6% discount to its private market net asset value, despite historically trading in line with its net asset value, so it should see some additional upside on top of its yield and growth. Moreover, MAA has significant exposure to Sunbelt markets, which have strong long-term demographic trends, and 59% of its portfolio is invested in B- to A- properties, with 62% invested in garden-style properties. So overall, it appears pretty well positioned to weather a stagflation environment. While it is not a multifamily REIT, I also like W.P. Carey (WPC) right now. Its triple-net lease business model is very defensive in nature, and the majority of its rent comes from CPI-linked leases, which makes it remarkably well-positioned to thrive in a stagflation environment. Additionally, with its BBB+ credit rating and its large and well-diversified portfolio with a focus on industrial warehouses, storage, and mission-critical retail assets, it should hold up well in a recession. Moreover, investors get to buy into WPC at an attractive valuation with a roughly 6% dividend yield and a price-to-FFO valuation multiple of just 12.4x compared to a three-year average of 14.1x and a five-year average of 14.5x. Its valuation multiple looks even more appealing when considering the fact that its portfolio is in better shape than perhaps ever before since it recently exited its office assets, and it also has finally fully exited its asset management business. Moreover, it has been aggressively growing its industrial and warehouse property portfolio, which is making it increasingly an industrial REIT, which should earn it a higher valuation multiple at some point from the market. Meanwhile, WPC is expected to grow its dividend at a 5% CAGR through 2027. This combines with the current dividend yield to deliver about an 11% expected annualized return without accounting for any valuation multiple expansion, though this could come as well. Investors could see significant value in WPC as a stagflation play compared to some of its less inflation-protected peers. Investor Takeaway As we discussed in this article, while the outlook for REITs is positive right now as the sector remains undervalued relative to its historical norms, private market values, and the broader market, and the bias towards lower interest rates should favor REITs as well, investors should be nuanced in their assessment of the impact of Federal Reserve interest rate cuts. It is likely that much of the downside in the near term will be in short-term rates rather than long-term rates, which may not have the desired effect on market sentiment for REITs. Additionally, a stagflation environment could weigh on more inflation-sensitive and economically sensitive REITs. As a result, I think the most attractive sector to invest in right now is multifamily REITs. I also like WPC because it is a very uniquely designed triple-net lease REIT that should do fairly well in a stagflation environment. If you want full access to our Portfolio which has beaten the market since inception and all our current Top Picks, join us for a 2-week free trial at High Yield Investor. We are the fastest-growing high yield-seeking investment service on Seeking Alpha with ~1,200 members on board and a perfect 5/5 rating from 169 reviews. Our members are profiting from our high-yielding strategies and you can join them today at a compelling value. With the 2-week free trial, you have nothing to lose and everything to gain. Start Your 2-Week Free Trial Today! Samuel Smith has a diverse background that includes being lead analyst and Vice President at several highly regarded dividend stock research firms. He is a Professional Engineer and Project Management Professional and holds a B.S. in Civil Engineering & Mathematics from the United States Military Academy at West Point and has a Masters in Engineering with a focus on applied mathematics and machine learning. Samuel leads the investing group High Yield Investor investing group. Samuel teams up with Jussi Askola and Paul R. Drake where they focus on finding the right balance between safety, growth, yield, and value. High Yield Investor offers real-money core, retirement, and international portfolios. The service also features regular trade alerts, educational content, and an active chat room of like-minded investors. Learn more Analyst's Disclosure: I/we have a beneficial long position in the shares of WPC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Earnings Preview: A REIT Revival?

Hoya Capital Income Builder members get exclusive access to our real-world portfolio. See all our investments here " Real Estate Earnings Preview Real estate earnings season kicked into gear last week, and over the next month, we'll hear results from more than 175 equity REITs, 40 mortgage REITs, and dozens of housing industry companies which will provide key insights into how the real estate industry is adapting to the shifting interest rate regime. This report discusses the major high-level themes and metrics we'll be watching across each of the real estate property sectors this earnings season. across most property sectors during the Fed's aggressive rate-hiking cycle. Notable 'green shoots' we've observed in recent commentary and industry data include: 1) surprising strength in office leasing activity; 2) a continued firming in residential rents (especially in limited-supply markets and sub-sectors); 3) a "bottoming" in logistics-related demand amid a rebound in manufacturing activity; 4) a slight cooldown in consumer-oriented trends including retail and travel demand; and 5) still-limited appetite for new ground-up development across all property sectors. Below, we compiled the earnings calendar for equity REITs and homebuilders. Even the most well-capitalized public REITs with modest debt levels were unable to escape the gravitational force of the "higher for longer" narrative, while the mere survival of many hundreds of highly-levered private market players was in significant doubt as the refinancing clock ticked ever-louder. Sentiment and macroeconomic conditions have shifted significantly in the past three months, fueled by several months of encouraging inflation data pointing once again towards a "soft landing" for the U.S. economy, and a resulting pivot in central bank tone and narrative from "how many rate hikes" to "how many rate cuts?" Swaps markets now price-in in a 98% probability that the Fed will cut rates in September and imply 2.52 rate cuts in 2024 - the most "dovish" interest rate environment since the middle of the first quarter. The sector with perhaps the most to gain from Federal Reserve rate cuts, REITs enter this earnings season with upside momentum after a dismal two-year stretch in which REITs accumulated roughly 50 percentage points of underperformance relative to the broader S&P 500 (SPY). Dating back to the start of the Fed's rate hiking cycle in March 2022, this historically wide underperformance gap exceeded that of the Great Financial Crisis and came despite a relatively stable fundamental environment for most property sectors outside of the troubled office sector. Last earnings season in April occurred at "rock bottom" for the real estate sector, with the Equity REIT Index (VNQ) trading at the lows of the year, having given back all of the late-2023 rebound. Since the start of last earnings season in mid-April, the Equity REIT Index has gained 14.0% - outpacing the 12.8% gains from the S&P 500 - with the bulk of this jump coming in just the past two weeks alone. For debt-dependent entities - of which there are many in the private real estate space, and a handful in the public area - conditions have merely gone from highly restrictive to moderately restrictive. Fitch reported last week that its measure of US CMBS delinquency rates rose to 2.33% in June, up 42 basis points from last year. Trepp reported a more significant rise in delinquency rates, with its measure of US CMBS delinquency rates rising to 5.35% in June, up 145 basis points from last year. While the vast majority of this increase is attributable to ongoing office distress, investors continue to closely monitor the multifamily space given its skew towards smaller "mom and pop" investors that lack the financing options of institutional players. Capitulation from debt-burdened private portfolios should create consolidation opportunities for REITs. Before diving into the specific sector-by-sector metrics we're focused on this earnings season, we discuss the four higher-level themes that we're focused on this earnings season: Calling a Bottom? - Macro Commentary M&A & IPO Environment: Any Signs of Animal Spirits? Updated 2024 Outlook & Dividend Commentary 1) Calling A Bottom - Macro Commentary Even before the rate retreat sparked a "REIT revival" in the past several weeks, there appeared to be some "bottoming" in private market real estate valuations in late Spring and early summer. Green Street Advisors released its monthly Commercial Property Price Index ("CPPI") last week, which showed that private-market CRE valuations posted a back-to-back monthly increase for the first time since 2021. The report showed that the CPPI - which had dipped over 20% from the peak in 2022 to the lows in early 2024 - increased 0.7% in June after a similar 0.7% increase in May, which lifted the year-to-date increase in CRE values to 1.4%. We've seen a few "false starts" over the past two years in the public markets in which hopes of easing monetary policy sparked a short-lived REIT rebound, but a bottoming in private market valuations would suggest that this rebound has more staying power. We're keyed-in on macro commentary from REITs regarding this "bottom" call. 2. M&A Environment: Animal Spirits Back? It took a while, but macroeconomic conditions are finally aligning such that the long-dormant "animal spirits" could come alive for public REITs through IPOs and acquisitions of debt-burdened private portfolios. Following a historically quiet period of REIT IPO activity dating back to the start of the Fed's rate hiking cycle in early 2022, cold storage operator Lineage (LINE) filed SEC paperwork last week for a planned $3.85B initial public offering, in what would be this year's largest IPO within not only the REIT sector, but across U.S. equity markets. Lineage is the world's largest cold storage operator with a network of roughly 480 facilities totaling over 84.1 million square feet across countries in North America, Europe, and Asia-Pacific. Americold (COLD) - the second-largest cold storage operator - went public in 2018 and has had a relatively successful tenure as a public REIT. Lineage - which plans to list on Nasdaq under ticker "LINE" - intends to use the proceeds of the IPO to pay down debt, a tactic that will be used with higher frequency if REIT equity valuations can sustain a valuation premium to private markets. 3. Updated Outlook & Dividend Commentary We're keyed in on these REITs' updated 2024 guidance, especially any changes in property-level fundamentals, which have remained surprisingly resilient The REIT sector is coming off a relatively solid first-quarter earnings season with a 41% FFO "raise rate," which was slightly above the historical REIT sector average for Q1. A similar beat/raise rate in the second quarter would be well received by the market. We've seen 52 REITs raise their dividends so far this year, while 9 REITs have reduced their payouts. On a market-cap-weighted basis, equity REITs pay an average dividend yield of 3.6% - a sizable premium to the 1.3% dividend yield on the broader S&P 500. While sector-level dividend coverage ratios remain healthy, dividend commentary will remain a major focus for office and mortgage REITs - the sectors that have been responsible for essentially all the recent dividend cuts across the REIT sector over the past two years. We believe that the "bleeding" in these sectors from a dividend cut perspective is largely contained at this point, and in fact, foresee some dividend increases from office REITs over the next quarter or two, which we think would go a long way towards shoring up investor confidence. Office & Hotel REIT Earnings Preview Office: Beneath the universal pessimism on the office outlook, we've actually observed surprisingly positive green shoots for the office sector in recent months. Brokerage firm Jones Lang LaSalle Inc. (JLL) released its quarterly office update last week, which showed very encouraging trends for the long-struggling office sector. Nationally, second quarter leasing volume jumped 15% from the first quarter to 50.2M SF, marking the highest level in over four years and up 7% from a year ago. This level of leasing activity was within 10% of pre-pandemic levels, and lifted the trailing twelve-month average to within about 20% of pre-pandemic averages. JLL notes that a major factor in the recovery has been a growing volume of larger transactions above 100k SF, with nearly double the activity of large-volume leases in Q2 compared to a year earlier. Forward-looking metrics tracked by JLL also remain positive, noting that its measure of Tenant in the Market (TIM) suggests that this elevated activity level will be sustained over the next several quarters. We're keyed in on a key question this quarter: will this steadying of fundamentals be enough to steady the ship? Hotels: On the other side of the spectrum, the U.S. hotel industry delivered a record-setting year of operating performance in 2023 as travel demand exceeded pre-pandemic levels by 5-10%, but after a very strong first quarter for the industry, we've observed some very slight moderation in travel demand in the second quarter across the various high-frequency metrics we track and from the handful of REIT business updates. TSA Checkpoint data shows that passenger throughput was roughly 3% above 2019 levels thus far in July - a mild slowdown from the 8% comparable increase in Q1 and 6% increase in Q2. Hotel data provider STR reports that industry-wide Revenue Per Available Room ("RevPAR") was 14% above 2019 levels in Q2 - roughly steady with the trends in Q1 - as still-solid pricing trends have offset some recent weakness in occupancy rates. Even with the slight demand moderation, we're expecting another solid quarter from hotel REITs, and continue to foresee these REITs being some leaders in dividend growth once again in 2024. Residential Real Estate Earnings Preview Apartments: For multifamily, oversupply concerns have eased in recent months as new construction starts have slowed substantially while demand has been particularly robust. RealPage reported last week that apartment demand "surged" in the second quarter, which has rapidly closed the supply-demand gap. Some 390,000 apartment units were absorbed over the past 12 months, which ranks as the eighth-largest figure on record, trailing only the pandemic-era boom from mid-2021 to mid-2022, and a brief period in 2018 and 2000. The booming demand comes at a critical time for the multifamily market, which has seen a record quantity of new units delivered - more than a half-million - over the past twelve months, with this pace expected to continue until early 2025 before moderating into 2026. The strong demand has also prevented a further deterioration in rental rates, which remained marginally positive on a year-over-year basis in June, with 0.1% annual growth at the national-level. RP highlights an especially strong recent correlation between rent growth and supply levels over the past quarter, with high-supply cities - including Austin, Atlanta, and Dallas - continuing to see rents decline, while limited-supply cities have posted mid-single-digit rent increases. We'll be closely watching rent growth metrics on new and renewed leases, commentary on supply conditions, and indications of any appetite for external growth. Single-Family Rentals: Supply growth has remained more contained on the single-family side, which has kept rent growth more buoyant throughout the rent cooldown. The latest CoreLogic report last week showed that SFR rent growth strengthened throughout the second quarter to a 3.2% annual rate in May, which was the highest annual growth rate since April 2023. With rents likely to settle in the "inflation-plus" range of 3-5% over the next several quarters, expenses will be the "wild card" - especially as it relates to insurance and property taxes. Double-digit percentage increases in insurance premiums and property taxes were the norm for property owners last year - driven primarily by a "catch-up" effect to reflect the roughly 25% increase in home values over the past two years. The brief period of negative home price appreciation in 2023 and tighter credit conditions quickly neutralized the pockets of speculative housing market activity - including the "fix-and-flips" and highly levered short-term rental ("STR") startups that were beginning to fizzle in 2021 and 2022, and the more challenging operating and financing conditions should give an easier pathway to institutional operators to accretively add to their portfolios. In addition to rent growth metrics, we're interested in commentary about these external growth prospects - specifically, whether these REITs are beginning to see any pockets of private-market distress that could be ripe for the picking - especially in light of the privatization of Tricon Residential by Blackstone earlier this year. Homebuilders: It's all about rates. Early this year, the U.S. homebuilding appeared poised to thaw from its deep freeze induced by historically aggressive monetary tightening, but the mid-year mortgage rate resurgence again pushed the upper limits on affordability for prospective buyers and prompted a pullback in speculative development. It remains the case, however, that higher mortgage rates have merely delayed - but not permanently altered - the existing secular fundamentals supporting the single-family market: a "lost decade" of single-family construction. These public builders have managed to sustain a relatively solid level of activity throughout this two-year deep freeze by gaining market share relative to their smaller competitors that lack the scale to sustainably compete in the ultra-competitive environment. Builders have a high bar to meet, however, following their incredible rally of nearly 90% in 2023 and further gains of 20% thus far in 2024. We're focused on net orders - expecting a modest positive inflection this quarter after roughly two years of year-over-year declines - along with cancellation rates, and gross margins. With builders no longer trading with deep discounts, further upside will require operational execution. Tech and Industrial REITs Earnings Preview Industrial: Among the "losers" of first-quarter earnings season, industrial REITs are off to a surprisingly solid start to second-quarter earnings season, with the initial trio of results indicating a bottoming in fundamentals and solid demand trends in recent months following a slow start to 2024. Logistics stalwart Prologis (PLD) called a bottom in market vacancy and noting "subdued but improving" demand in logistics alongside a moderation in supply growth. Commenting on macro conditions, Prologis estimated that global market rents declined 2% during the quarter, but commented that weakness in Southern California was responsible for 75% of this decline. Rexford (REXR) - which focuses exclusively on this region - noted that Southern California market rents fell another 2% during the quarter and were roughly 5% lower from a year earlier, but it was still able to achieve mark-to-market rent increases of 49% on a cash basis in Q2 - a modest acceleration from the prior quarter but below the 60% increases on its leases from '22-23. Sunbelt-focused First Industrial (FR) delivered surprisingly strong results and boosted its full-year NOI and FFO outlook, driven by strong leasing activity in its speculative developments. FR commented that "fundamentals are slowly improving, although as expected, market vacancy ticked up...decision-making remains fairly deliberate." We're interested in hearing whether other industrial REITs share this initial trio's outlook on supply-demand fundamentals, and for any commentary on prospects for private market acquisition activity. Cell Towers: Cell Tower REITs have been the weakest-performing property sector since the start of 2022 - lagging even the battered office sector - amid a telecommunications industry-wide slump inflamed by tight monetary conditions. Cellular carriers have curbed their capital-intensive network expansion plans in recent quarters, following a significant wave of investment and tower equipment upgrades from 2019-2022 to deploy nationwide 5G networks. Crown Castle (CCI) kicked off the earnings slate last week with a solid report and maintained the full-year outlook that it provided in last month's interim business update. Commentary on carrier demand was marginally more upbeat than recent quarters, with CCI noting that demand is "steady state" following a significant decline in network spending last year, which "gives us optimism that what we've forecasted for revenue growth is directionally correct." CCI's small-cap and fiber segments were the bright-spot of Q2 results, however, with small-cap organic growth of 10.9% and fiber growth of 3.2% - each above the prior forecast - while tower organic growth was in line with expectations at 4.4%. American Tower (AMT) has also been in the midst of a strategic shake-up, having completed an exit from the Indian market earlier this year. We're focused on commentary on these strategy shifts and further commentary on expectations for network spending. Data Center: The top-performing property sector last year, Data Center REITs have continued their strong relative performance in 2024 as the AI boom continues to drive elevated leasing activity. CBRE's latest report last month showed strong trends in recent months, noting that North American data center vacancy rates hit new lows across major markets, driven by robust absorption by public cloud providers and AI companies. Most importantly, the report notes that data center pricing is "significantly accelerating due to supply shortages and high demand." Average asking rates for a typical 250- to 500-kW requirement across all four featured North American markets surged by 20% year-over-year, the highest global increase, as supply shortages are increasingly driven by power constraints. Ironically, the improved competitive positioning of these REITs and the surge in rent growth over the past eighteen months came just as data center REITs became a trend "short" play. The now infamous short report from Chanos & Company in July 2022 came at the "bottom" of a half-decade-long slump in rental rates. The report from Equinix (EQIX) will be closely watched after it was targeted earlier this year in a short report from Hindenburg. As always, we'll also be keyed-in on renewal pricing trends and leasing volumes this quarter. Healthcare REIT Earnings Preview Senior Housing: Continuing their strong performance from last year, Senior Housing and Skilled Nursing REITs have been among the leaders this year as recent data shows a continued recovery in occupancy rates alongside historically strong rent growth. Earlier this month, industry data provider NIC published its quarterly Market Fundamentals report, which showed that senior housing occupancy rates increased for the 12th consecutive quarter to 85.9%, which is 8.2 percentage points above its pandemic low of 77.8% in the second quarter of 2021. The skilled nursing occupancy rate, meanwhile, rose to 84.3% in the most recent quarter, up 9.6 percentage points from its pandemic low of 74.7%. Fueled by tailwinds from record-setting COLA adjustments in 2023, rent growth across both Senior Housing and Skilled Nursing facilities remained historically strong in early 2024, each rising by 4.4%. Supply growth remains muted as well, with NIC noting that the rolling four-quarter average for construction starts sits at 1.50% of total inventory - hovering near the lowest since 2010. These tailwinds bode very well for tenant financial health and rent coverage, which remains the primary focus of earnings season for senior housing and skilled nursing REITs. Medical Office: Somehow even more "unloved" than traditional office, medical office building ("MOB") REITs enter earnings season as the worst-performing sub-sector this year, and are now trading at average Price-to-FFO valuations that are below that of traditional office REITs. While these REITs do tend to be among the more rate-sensitive segments, the poor performance is a bit head-scratching given the relatively strong property-level fundamentals. JLL's latest report published last quarter concludes, "[MOB] fundamentals remain strong, and construction starts remain slow, positioning medical outpatient buildings for increasing occupancy and rental rate growth, driving increased allocation from capital rotating from other asset classes." The report notes that absorption has outpaced construction every quarter since Q2 2021 as completions have slowed while demand accelerated. This drove occupancy up from 91.4% at the end of 2020 to 93.0% in Q4 2023. Despite steady demand, construction starts for MOBs have remained below pre-pandemic averages over the past three years. We think MOB REITs have a relatively low hurdle to meet this earnings season, and will be looking for integration progress on recent merger activity from the two largest MOB REITs. Hospital: Embattled hospital owner Medical Properties Trust (MPW) - which is the most heavily-shorted REIT - will be among the most closely-watched reports this earnings season after its largest tenant - Steward Healthcare - filed for Chapter 11 bankruptcy in May. Prior to the latest renewed scrutiny on Steward, MPW had reported solid progress in its planned liquidity transactions slated for this year as it seeks to divest from several struggling operators, including a $1.1B portfolio sale of five hospitals in April, and announced that it maintained its quarterly dividend. Also in April, MPW announced that it closed on its sale of five facilities in California and New Jersey to Prime Healthcare for a total of $350M. The pair of deals brought MPW's total portfolio sales to $1.6B, which is 80% of its initial FY 2024 target. MPW commented in its earnings call last quarter that it plans to replace Steward in "many" of its hospitals by September 30 - and nearly 100% over time - "so that even if Steward remains in bankruptcy, its effect on [MPW] are mitigated." We're keyed in on updates on how recent Steward developments will impact plans. Retail REITs Earnings Preview Strip Centers: Retail REIT fundamentals have improved materially over the past eighteen months and continue to be underappreciated in the market, as a decade-long "retail apocalypse" narrative has been tough to shake. The combination of near-zero new development and positive net store openings since 2021 has driven occupancy rates to record highs and allowed both Strip Center and Mall REITs to enjoy some long-awaited pricing power. Despite several high-profile retail bankruptcies last year - including Bed Bath & Beyond and Party City - store openings outpaced store closings by about 10% in 2023, and recent data from Coresight shows that the positive momentum has continued into mid-2024. Planned and announced US store openings for 2024 totaled more than 4,200 through the end of June, outpacing store closures by 20% and resulting in nearly 78 million square feet of new retail space. We'll again be focused on leasing spreads and occupancy rate trends - which have been impressive of late - and on updates on re-lease progress at these vacated Bed Bath and Party City locations. Malls: With distress across office markets seizing the headlines, Mall REITs are no longer the "Problem Child" of the REIT sector, particularly after weaker players and lower-tier malls closed shop. Following three years of rental rate and occupancy declines, the supply-demand dynamic has recently favored retail landlords, which has helped these stumbling mall REITs regain some footing and repair balance sheets. Traffic and sales levels at higher-end mall properties have been back at pre-pandemic levels since late 2023, and retail sales data indicates that consumers were still spending. Data last week showed that Retail Sales were stronger than expected in June, posting an acceleration in the annual growth rate for the first time since February. We're focused on same-store occupancy rates and renewal rent growth. Net Lease: The most "bond-like" and interest-rate-sensitive property sectors, the pullback in benchmark rates has restored some positive vibes into the net lease sector. Thriving in the "lower forever" environment, the industry has been reluctant to acknowledge the higher-rate regime, keeping private-market values and cap rates surprisingly "sticky" and resulting in compressed investment spreads. Strong balance sheets and lack of variable rate debt exposure have positioned net lease REITs to be aggressors as over-levered private players seek an exit, but these REITs can afford to wait until the price is right. We're keyed in on commentary regarding cap rate movements in mid-2024 and whether the rebound in interest rates in Q2 - and subsequent pullback in early July - has changed the outlook for activity in 2024. Mortgage REIT Earnings Preview For perhaps the first time since the start of the pandemic, mortgage REIT earnings season is expected to be rather "boring," as underlying valuations of Mortgage-Backed Securities ("MBS") were remarkably steady during the quarter, but the steady macro conditions should provide good insight into the true earnings power of these mREITs. The Residential iShares MBS ETF (MBB) - which tracks the un-levered performance of residential mortgage-backed securities ("RMBS") - posted total returns of 0.3% in Q2, and has gained another 1.4% thus far in early Q3. The iShares Commercial MBS ETF (CMBS) - which tracks the un-levered performance of commercial mortgage-backed securities ("CMBS") - posted gains of 0.5% in Q2, and has gained another 0.9% thus far in early Q3. RMBS and CMBS spreads were effectively unchanged during the quarter, while benchmark interest rates - as measured by the 10-Year Treasury Yield - also ended the quarter within a few basis points of where they started. For residential mREITs, we expect an average Book Value Per Share ("BVPS") increase of 1-3% in the quarter, and for commercial mREITs, we expect a change of -1% to +1%. Despite paying average dividend yields in the mid-teens, the majority of mREITs have been able to cover their dividends, but there remains a handful of mREITs with payout ratios above 100% of EPS. Key Takeaways: Real Estate Earnings Preview Real estate earnings season kicked off last week, and over the next month, we'll hear results from 175 equity REITs, 40 mortgage REITs, and dozens of housing industry companies. The sector with perhaps the most to gain from Fed rate cuts, REITs enter earnings season with upside momentum after a dismal two-year stretch, including 50 percentage points of market underperformance. Has the REIT Revival begun? REITs have posted double-digit gains over the past two weeks, as encouraging inflation data has put the Fed on course to cut rates in September. Even before the rate retreat sparked a "REIT revival" in the past several weeks, there appeared to be some "bottoming" in private market real estate valuations in late Spring and early summer. It took a while, but macroeconomic conditions are finally aligning such that the long-dormant "animal spirits" could come alive for public REITs through IPOs and acquisitions of debt-burdened private portfolios. 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24 Barron's Pro-Picked 2024 Mid-Year Dividend Dogs: Buy 2 In July

Looking for a portfolio of ideas like this one? Members of The Dividend Dog Catcher get exclusive access to our subscriber-only portfolios. Learn More " This article is based on the July 15 Barron's Weekly article aimed at revealing 48 select stocks for the Mid-Year 2024. That article was: "You can never be too rich, but can you be too thin? That's just what many investors have wondered about the current bull market's exceedingly narrow foundation, composed of just a handful of mega cap tech stocks leading the artificial-intelligence revolution. Their concerns were validated somewhat on Thursday, after a weak inflation report raised the odds that the Federal Reserve will lower interest rates in September. The pivot, so to speak, kicked off a wrenching rotation into long-neglected sectors of the market, some of which had their best day in years. While one day's trading doesn't make a trend, the members of the Barron's Roundtable can only hope. Most are value-oriented investors with an abiding fondness for well run, cash-rich companies, many of them midsize and smaller, whose manifold virtues have been ignored and underpriced almost since the day "Magnificent" became a modifier of "Seven." It isn't that these and other investors are cheering for Nvidia and its ilk to fall; they are merely waiting, seemingly eternally, for the rest of the market to rise. As is our annual custom, we checked in with the members of the Roundtable by phone over the past two weeks to get their take on how the world has changed since all 11 met in person on Jan. 8 in New York. In the process, we collected 48 investment picks for the second half of this year and beyond -- some reiterated from January, but many more new. If narrow markets either broaden or die, it is comforting to know that so many quality stocks, so attractively priced, are waiting in the wings." -- Barron's Lauren R. Rublin Barron's Mid-Year 2024 Roundtable panelists and their stock picks for this article: Todd Ahlsten CIO and lead portfolio manager, Parnassus Core Equity fund, Founder and president, Delphi Management, Boston Professor of Business, Graduate School of Business, CIO and portfolio manager, Franklin Templeton Fixed Income, Putnam Strategic Intermediate Municipal / PAMYX iShares 1-5 Year Investment Grade Corporate Bond / IGSB 51.38 Eaton Vance Emerging Markets Debt Opportunities / EADOX CIO and managing partner, Durable Capital Partners, CIO, T. Rowe Price Investment Management and portfolio manager, Capital Appreciation fund, T. Rowe Price, Baltimore Chairman and CIO, GQG Partners, Fort Lauderdale, Fla. Founder, chairman, co-CEO, and CIO, Ariel Investments, Chicago Executive chairman and co-CIO, Epoch Investment Partners, General partner, Eagle Capital Partners, New York Any collection of stocks is more clearly understood when subjected to this yield-based (dog catcher) analysis, these Barron's Mid-Year 2024 Pro Picks are perfect for the dogcatcher process. Here is the July 17 updated YCharts data for 24 dividend paying stocks of 48 screened and the 1 living up to the dogcatcher 'ideal' in this collection. These made-up the Barron's Mid-Yr 2024 Pro-Picks collection. The Ides of March 2020 plunge in the stock market took its toll on all stocks over four and one-quarter years ago. However, the sudden recovery in prices after the plunge by dividend stocks made the possibility of owning productive dividend shares from any collection more remote for first-time investors. July 2024 shows two glimmers of light from two stocks emerging as a dogcatcher ideal candidates. They were: Petrobras (PBR) in the top ten by yield and Paramount Global (PARA) just outside the top ten. PBR price settled at 9.26 times below the (declared) annual dividend payout from a $1K investment. Whereas. PARA's price was just 1.35 times below its annual dividend from $1K invested. Five of the top-by-yield ten, Barron's Mid-Yr 2024 Pro-Picks (tinted in the chart below), were also the top gainers for the coming year based on analyst 1-year targets. Thus, the top yield dog strategy for this group, as graded by analyst estimates for this month, proved 50% accurate. Estimated dividend-returns from $1000 invested in each of the highest-yielding stocks and their aggregate one-year analyst median-target prices, as reported by YCharts, created the 2024-25 data points. However, one-year target-prices by lone analysts were not counted. The resulting ten probable best profit-generating 2024 Barron's Mid-Year Pro Picks projected to July 17, 2025, by that reckoning, were: Schlumberger Ltd (SLB) netted $350.86 based on the median of target estimates from 30 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 3% greater than the market as a whole. Rush Enterprises, Inc. (RUSHA) netted $281.36 based on the median of target estimates from 2 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 2% greater than the market as a whole. Petroleo Brasileiro SA Petrobras netted $278.90 based on the median of target estimates from 13 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 42% more than the market as a whole. ASML Holding N.V. (ASML) netted $249.38 based on the median of target price estimates from 12 analysts plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 49% greater than the market as a whole. West Pharmaceutical Services (WST) netted $242.10 based on estimates from 9 analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 1% less than the market as a whole. National Fuel Gas Co (NFG) netted $216.34 based on estimates from 3 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% less than the market as a whole. Salesforce, Inc. (CRM) netted $210.16 based on the median of target prices estimated by 45 analysts, plus estimated dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 29% greater than the market as a whole. TotalEnergies SE (TTE) netted $208.19 based on the median of target estimates from 9 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 37% less than the market as a whole. Broadcom Inc. (AVGO) netted $201.08 based on the median of target estimates from 38 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 17% greater than the market as a whole. Nestle S.A. (OTCPK:NSRGY) netted $194.58 based on dividends plus a median target price estimate from 4 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 46% less than the market as a whole. The average net-gain in dividend and price was 24.33% on $10k invested as $1k in each of these ten 2024 Barron's Mid-Year Pro-Picks. This gain estimate was subject to average risk/volatility 2% greater than the market as a whole. The "dog" moniker was earned by stocks exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. Thus, the highest yielding stocks in any collection became known as "dogs." More specifically, these are, in fact, best called, "underdogs". This scale of broker-estimated upside (or downside) for stock prices provides a scale of market popularity. Note: no broker coverage or 1 broker coverage produced a zero score on the above scale. This scale can be taken as an emotional component as opposed to the strictly monetary and objective dividend/price yield-driven report below. As noted above, these scores may also be taken as contrarian. Top ten equities selected 7/17/24 by yield represented three of eleven Morningstar sectors and three ETFs. First place was secured by the first of four energy sector members, Petrobras [1]. The other three placed second, third, and ninth, TotalEnergies SE [2], Shell plc (SHEL) [3], and Schlumberger Ltd [9]. Outside the sector spectrum, three exchange-traded funds penetrated the top ten Barron's 2024 Mid-Yr Pro-Picked list in fourth, fifth and tenth places, iShares Core Total USD Bond Market ETF (IUSB) [4], and iShares 1-5 Year Investment Grade Corp Bond ETF (IGSB) [5], and SPDR® Portfolio S&P 500 Value ETF (SPYV) [10]. Sixth place was secured by the lone utilities representative, National Fuel Gas Co [6]. Finally, two consumer staples members placed seventh, and eighth: Nestlé SA [7], and Campbell Soup Co (CPB) [8] which completed the top ten Barron's Mid-Year 2024 Pro-Picks for July. To quantify top-yield rankings, analyst median-price target estimates provided a "market sentiment" gauge of upside potential. Added to the simple high-yield metrics, analyst median price target estimates became another tool to dig-out bargains. Ten top Barron's Mid-Yr 2024 Pro-Picks were culled by yield for this monthly update. Yield (dividend/price) results verified by YCharts did the ranking. As noted above, the top-ten Barron's Mid-Yr 2024 Pro-Picked Dogs tagged 7/17/24, showed the highest dividend yields, represented ten of eleven sectors and ETFs in the Morningstar scheme. $5000 invested as $1k in each of the five lowest-priced stocks in the top ten Barron's Mid-Yr 2024 Pro-Pix by yield were predicted by analyst 1-year targets to deliver 7.18% LESS gain than $5,000 invested as $.5k in all ten. The fourth lowest-priced Barron's Mid-Yr 2024 Pro-Pick, Schlumberger Ltd, was projected to deliver the best net gain of 35.09%. The five lowest-priced top-yield Barron's Mid-Yr 2024 Pro-Picks for July 17 were: Petrobras; Campbell Soup; Schlumberger; iShares Core Total USD Bond Market ETF; SPDR® Portfolio S&P 500 Value ETF, with prices ranging from $14.95 to $50.49 The five higher-priced top-yield Barron's Mid-Yr 2024 Pro-Pix for July 17 were: iShares 1-5 Year Investment Grade Corporate Bond ETF; National Fuel Gas; TotalEnergies SE; Shell PLC; Nestlé, whose prices ranged from $51.57 to $105.83. This distinction between five low-priced dividend dogs and the general field of ten reflected Michael B. O'Higgins' "basic method" for beating the Dow. The scale of projected gains based on analyst targets added a unique element of "market sentiment" gauging upside potential. It provided a here-and-now equivalent of waiting a year to find out what might happen in the market. Caution is advised, since analysts are historically only 15% to 85% accurate on the direction of change and just 0% to 15% accurate on the degree of change. If somehow, you missed the suggestion of the two stocks ripe for picking at the start of the article, here is a repeat at the end: In the current market advance, dividends from $1K invested in the stock listed above exceeded their single share prices as of 3/5/24. As we near the fourth anniversary of the 2020 Ides of March dip, the time to snap up the top yield Barron's NY 2024 Pro Pick is now... unless another big bearish drop in price looms ahead. (At which time your strategy would be to add to your holdings.) Since one of the top-ten Barron's MY2024 Pro-Pick is priced less than the annual dividends paid out from a $1K investment, the following top chart shows the dollar and percentage shift required for nine at recent prices to achieve fair pricing for all ten. The recent prices are documented in the middle chart and the fair prices revealed in the bottom chart. The top chart is an indicator of how low the nine non-ideal stocks must adjust to become fair-priced. Which means conforming to the standard of dividends from $1K invested exceeding the current single share price. The analysis above focuses primarily on the top yield 23 Barron's/Fortune NY2024 Pro-Picked selections. Below is the list of all 48 stocks, by alpha/numeric listing. The net gain/loss estimates above did not factor in any foreign or domestic tax problems resulting from distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment. Stocks listed above were suggested only as possible reference points for your Barron's Mid-Year 2023 Pro-Pick purchase or sale research process. These were not recommendations. Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy or sell any security. Prices and returns on equities in this article except as noted are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding, or selling same. Graphs and charts were compiled by Rydlun & Co., LLC from data derived from www.indexarb.com; YCharts.com; Yahoo Finance - Stock Market Live, Quotes, Business & Finance News; analyst mean target price by YCharts. Dog Photo by Mel Elías on Unsplash