9 Highly Rated REITs With Big Dividends

BOSTON (TheStreet) -- Real estate investment trusts (REITs) are posting market-beating returns this year. The reasons are four-fold: low interest rates will keep borrowing costs down, a lack of new construction will keep prices high, consumer spending is rebounding, and investors are seeking out strong, stable dividends.

Retail REITs' shares have an average total return of 26% this year, versus the S&P 500's 16% gain.

Investors particularly favor REITs for their hearty dividends. As of Sept. 18, the average retail REIT yield was 3.07%, with shopping centers yielding 3.42%, regional malls 2.70% and freestanding stores 4.35%, according to the National Association of Real Estate Investment Trusts.

One of the highest-rated REITs, CBL & Associates Properties ( CBL), is up 45% this year, including 23% in the past three months, and its shares carry a 3.84% dividend yield.

S&P Capital IQ equity analyst Robert McMillan is cautiously optimistic for the sector. "Although challenges remain and raising rents is always a contentious issue," pricing power will increase, he said in a Sept. 19 research note.

Retail REITs saw their average occupancy rates for the second quarter of this year increase to 93.4% from 92.4% last year. "This was a significant acceleration over the year-ago performance, when occupancy was essentially flat," McMillan said.

Funds from operations, the key measure for REITs, will advance about 7.5% this year and 6% in 2013, enabling companies to boost dividends, he said.

Here are summarizes of the nine largest retail REIT stocks (market values of at least $2 billion), arranged in inverse order of the number of analysts' "buy" ratings they have:

9. Taubman Centers ( TCO)

Company profile: Taubman, with a market value of $5 billion, is the general partner of The Taubman Realty Group LP, an operating partnership that owns, operates and develops regional shopping centers nationwide. At the end of 2011, the trust's portfolio consisted of 23 owned shopping centers in 11 states.

Dividend Yield: 2.34%

Investor takeaway: Its shares are up 30% this year and have a three-year, average annual return of 33%. Analysts give its shares two "buy" ratings, one "buy/hold," nine "holds," and one "weak hold," according to a survey of analysts by S&P.

8. Federal Realty Investment Trust ( FRT)

Company profile: Federal Realty, with a market value of $7 billion, specializes in the ownership, management and redevelopment of community and neighborhood shopping centers.

Dividend Yield: 2.67%

Investor takeaway: Its shares are up 28% this year, including 5% in the past three months, and have a three-year, average annual return of 21%. Analysts give its shares two "buy" ratings, two "buy/holds," eight "holds," and two "weak holds," according to a survey of analysts by S&P.

Morningstar analysts say its "business model and retail shopping center portfolio have been consistent outperformers through market and real estate cycles, in terms of operations, cash flow growth, and returns exceeding its cost of capital."

7. Macerich ( MAC)

Company profile: Macerich, with a market value of $8 billion, owns and manages a portfolio of regional and community shopping centers throughout the U.S.

Dividend Yield: 3.73%

Investor takeaway: Its shares are up 20% this year and have a three-year, average annual return of 27%. Analysts give its shares two "buy" ratings, three "buy/holds," and 11 "holds," according to a survey of analysts by S&P.

6. Kimco Realty ( KIM)

Company profile: Kimco, with a market value of $8 billion, is one of the biggest owners and operators of neighborhood and community shopping centers in the U.S.

Dividend Yield: 3.68%

Investor takeaway: Its shares are up 34% this year, including 12% in the past three months, and have a three-year, average annual return of 14%. Analysts give its shares three "buy" ratings, five "buy/holds," eight "holds," and one "weak hold," according to a survey of analysts by S&P.

5. Riocan Real Estate Investment Trust ( RIOCF)

Company profile: Riocan, with a market value of $8 billion, is Canada's largest real estate investment trust exclusively focused on retail real estate. It owns and manages a portfolio of shopping centers.

Dividend Yield: 2.42%

Investor takeaway: Its shares are up 9% this year and 11% over the year since going public. Analysts give its shares three "buy" ratings and four "holds," according to a survey of analysts by Morningstar.

4. Glimcher Realty Trust ( GRT)

Company profile: Glimcher, with a market value of $2 billion, owns enclosed regional and super-regional malls.

Dividend Yield: 3.65%

Investor takeaway: Its shares are up 21% this year, including 14% in the past three months, and have a three-year, average annual return of 46%. Analysts give its shares one "strong buy" rating, two "moderate buys," and three "holds," according to a survey of analysts by TheStreet.

3. CBL & Associates Properties ( CBL)

Company profile: CBL, with a market value of $4 billion, is a fully integrated real estate investment trust owns regional malls and community shopping centers, primarily in the Southeast and Midwest.

Dividend Yield: 3.84%

Investor takeaway: Its shares are up 45% this year, including 23% in the past three months, and have a three-year, average annual return of 34%. Analysts give its shares three "buy" ratings, five "buy/holds," four "holds," one "weak hold," and one "sell," according to a survey of analysts by S&P.

S&P, which has it rated "strong buy," says: "We think CBL will benefit from its position as one of the largest shopping center owners/managers in the U.S., its focus on having the dominant shopping center in mid-sized markets, and its established relationships with numerous retailers, which should allow it to continue to generate moderate growth over the long term."

2. Weingarten Realty Investors ( WRI)

Company profile: Weingarten Realty, with a market value of $3 billion, focuses primarily on the development, acquisition and ownership of neighborhood and community shopping centers. At the end of 2011, it had interests in 380 developed income-producing properties and 11 properties under various stages of construction and development.

Dividend Yield: 4.1%

Investor takeaway: Its shares are up 34% this year, including 12% in the past three months, and have a three-year, average annual return of 14%. Analysts give its shares four "buy" ratings, one "buy/hold," and seven "holds," according to a survey of analysts by S&P.

1. Simon Property Group ( SPG)

Company profile: Simon, with a market value of $47 billion, owns, develops and manages retail real estate, primarily regional malls, outlet centers and community/lifestyle centers, across the U.S.

Dividend Yield: 2.69%

Investor takeaway: Its shares are up 23% this year and have a three-year, average annual return of 32%. Analysts give its shares six "buy" ratings, six "buy/holds," four "holds," and two "weak holds," according to a survey of analysts by S&P.

S&P, which has it rated "buy," says its "position as one of the largest owners and managers of shopping centers in the U.S., and its established relationships with numerous retailers, will allow it to continue to generate solid long-term growth."

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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