Now is no time to ignore the potential of real estate stocks. Owning real estate can provide diversification and income that can add some steadiness to any portfolio in today's tanking markets. Taking that stake in the form of equities can add liquidity and transparency, too.
Real estate investment trusts (REITs) are a particularly attractive option right now. There are a couple of hundred publicly traded equity REITs, each with its own mix of holdings but all with the obligation of returning at least 90% of their taxable income to shareholders in the form of dividends.
Want to start small? Say, maybe with $1,000? Consider splitting that ante equally among Life Storage (LSI), Terreno Realty (TRNO -1.78%), and Crown Castle International (CCI -1.77%). Each has done well during the pandemic, easily beating the benchmark Vanguard Real Estate ETF, and they're trading at prices now that might look cheap in a few years.
Image source: Getty Images.
Take a stake in the self-storage business
Life Storage is a major presence in the burgeoning self-storage business. There's a reason you see these facilities seemingly everywhere. They're relatively cheap to develop and manage; the leases tend to be short, allowing the rent to easily be raised to counter inflation; and the demand that has been there for years only accelerated as more people downsized and/or moved in the past couple of years.
Life Storage has about 900 facilities in 30 states and Ontario and currently pays a dividend yield of about 3.31% after raising the payout by about 4.92% in the past three years. So, your $333.33 (one third of that $1,000 stake) would buy you about three shares of this stock -- currently trading at about $113 a share -- and the dividend of $1.00 per share would get your $3 a quarter while you watch the share price return to its rising ways.
A special kind of warehouse play
Terreno Realty is a provider of logistical warehouse space, a go-go industry that should still have plenty of room to run as e-commerce and supply chain imperatives keep driving up domestic demand. Terreno is a bit different from the competition, though.
This industrial REIT specializes in small properties nestled in crucial transportation nodes in several coastal markets on both sides of the country. The company has been regularly adding to its portfolio and has raised the dividend for 10 straight years, including by about 11.05% in the past three years.
Terreno stock is currently trading for about $64.40 a share, so your five shares of that would pay you $1.70 a quarter at the dividend rate of $0.34. That's good for a yield of about 2.10%.
Making big moves into small cells
Despite its name, Crown Castle International's markets are all American, including about 40,000 traditional cell towers, about 80,000 miles of fiber-optic cable network, and a collection of small cell nodes that the company plans to grow by 10,000 installations a year as it enters into what its CEO calls "an important transition year" for its move into this fast-emerging 5G infrastructure sector.
Crown Castle has boosted its dividend by about 8.50% in the past three years, adding to a streak of 10 years of increases, and investors can enjoy a current yield of about 3.46% while waiting for that new strategy to translate to growing profits and share price. In the meantime, your approximately one-third of that $1,000 stake put to this stock would buy a couple shares at the current price of about $171.18, and the quarterly dividend of $1.47 would net you $2.98 every three months.
TRNO total return level. Data by YCharts.
Getting off to a grand start
None of these three are the biggest REITs in their respective industries, but they give the competition a run for the money in growth and income, and any or all would be a grand place to plunk a thousand bucks in real estate.
