9 Commercial Real Estate REITs to Buy for Big Dividends

NEW YORK (TheStreet) -- With unemployment rates dropping this year and commercial real estate booming, it could be a good time to invest in commercial real estate REITs.

These kind of real estate investment trusts invest in office buildings, warehouses, retail space and other kinds of commercial spaces.

In general, investors like REITs for their strong dividend income, among other factors, as REITs are required to pay out at least 90% of their income in the form of dividends to investors each year.

In the first quarter, the FTSE NAREIT All REITs Index, a broad benchmark of the listed U.S. REIT industry including both equity and mortgage REITs, rose 4.05% for the quarter, compared to the S&P 500's return of just 0.95% for the first three months of the year.

For the month of April, the FTSE NAREIT Equity Office Index, comprised of 21 constituents, rose 0.31% for the year, outperforming the association's broader REIT index, which had fallen 1.17%, in the same time period.

So, which ones should investors add to their portfolios? Here's nine to consider. The stocks on this list are all buy-rated stocks in the Office REITs sub-industry.

TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Note: Year-to-date returns are based on June 1, 2015 closing prices.

BMR Chart BMR data by YCharts

1. BioMed Realty Trust (BMR)
Market Cap: $4.1 billion
Annual Dividend Yield: 4.92%

Year-to-date return: -4.8%
BioMed Realty Trust, Inc. operates as a real estate investment trust (REIT) that focuses on providing real estate to the life science industry in the United States.

TheStreet Ratings: Buy, B-
TheStreet Ratings said: "We rate BIOMED REALTY TRUST INC (BMR) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team gobxp
es as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.5%. Since the same quarter one year prior, revenues slightly increased by 5.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • BIOMED REALTY TRUST INC's earnings per share declined by 20.0% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, BIOMED REALTY TRUST INC increased its bottom line by earning $0.98 versus $0.20 in the prior year.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, BIOMED REALTY TRUST INC's return on equity is below that of both the industry average and the S&P 500.
  • In its most recent trading session, BMR has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.

 

BXP Chart BXP data by YCharts

2. Boston Properties Inc. (BXP)
Market Cap: $20.2 billion
Annual Dividend Yield: 1.96%

Year-to-date return: 2.3%

Boston Properties, Inc., a real estate investment trust (REIT), together with its subsidiaries, engages in the ownership and development of office properties.

TheStreet Ratings: Buy, B
TheStreet Ratings said: "We rate BOSTON PROPERTIES INC (BXP) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, increase in stock price during the past year and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BXP's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues slightly increased by 9.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • 35.09% is the gross profit margin for BOSTON PROPERTIES INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.36% is above that of the industry average.
  • Net operating cash flow has significantly increased by 62.18% to $201.45 million when compared to the same quarter last year. In addition, BOSTON PROPERTIES INC has also vastly surpassed the industry average cash flow growth rate of 0.73%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 206.9% when compared to the same quarter one year prior, rising from $56.62 million to $173.77 million.

 

COR Chart COR data by YCharts

3. CoreSite Realty Corp. (COR)
Market Cap: $1 billion
Annual Dividend Yield: 3.54%

Year-to-date return: 21.4%

CoreSite Realty Corporation engages in the ownership, acquisition, construction, and management of data centers.

TheStreet Ratings: Buy, B
TheStreet Ratings said: "We rate CORESITE REALTY CORP (COR) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • COR's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 17.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CORESITE REALTY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CORESITE REALTY CORP increased its bottom line by earning $0.66 versus $0.50 in the prior year. This year, the market expects an improvement in earnings ($0.84 versus $0.66).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 38.1% when compared to the same quarter one year prior, rising from $4.82 million to $6.65 million.
  • Net operating cash flow has increased to $30.75 million or 15.12% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.73%.
  • Powered by its strong earnings growth of 61.53% and other important driving factors, this stock has surged by 51.57% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

 

 

 

DFT Chart DFT data by YCharts

4. DuPont Fabros Technology Inc. (DFT)
Market Cap: $2.1 billion
Annual Dividend Yield: 5.16%

Year-to-date return: -1.8%
DuPont Fabros Technology, Inc., a real estate investment trust (REIT), engages in the ownership, acquisition, development, operation, management, and lease of large-scale data center facilities in the United States.

TheStreet Ratings: Buy, B
TheStreet Ratings said: "We rate DUPONT FABROS TECHNOLOGY INC (DFT) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, reasonable valuation levels, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, DFT's share price has jumped by 29.26%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DFT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.5%. Since the same quarter one year prior, revenues slightly increased by 5.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $49.09 million or 10.34% when compared to the same quarter last year. In addition, DUPONT FABROS TECHNOLOGY INC has also modestly surpassed the industry average cash flow growth rate of 0.73%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, DUPONT FABROS TECHNOLOGY INC's return on equity is below that of both the industry average and the S&P 500.

 

FSP Chart FSP data by YCharts

5. Franklin Street Properties (FSP)
Market Cap: $1.2 billion
Annual Dividend Yield: 6.52%

Year-to-date return: -4.5%
Franklin Street Properties Corp. is a publicly traded hybrid real estate investment trust. The firm invests in the real estate markets of the United States. It primarily engages in property acquisitions and dispositions, short-term financing, leasing, development and asset management.

TheStreet Ratings: Buy, B-
TheStreet Ratings said: "We rate FRANKLIN STREET PROPERTIES (FSP) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, impressive record of earnings per share growth and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 250.8% when compared to the same quarter one year prior, rising from $3.57 million to $12.53 million.
  • FRANKLIN STREET PROPERTIES reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FRANKLIN STREET PROPERTIES reported lower earnings of $0.14 versus $0.18 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus $0.14).
  • FSP, with its decline in revenue, underperformed when compared the industry average of 8.5%. Since the same quarter one year prior, revenues slightly dropped by 4.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, FRANKLIN STREET PROPERTIES's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for FRANKLIN STREET PROPERTIES is currently extremely low, coming in at 13.99%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 20.82% trails that of the industry average.

 

 

 

GPT Chart GPT data by YCharts

6. Gramercy Property Trust Inc. (GPT)
Market Cap: $1.6 billion
Annual Dividend Yield: 2.97%

Year-to-date return: -9% (return as of stock split on March 23, 2015)
Gramercy Property Trust Inc is an equity real estate investment trust. The firm invests in the real estate markets of the United States. It makes investments in industrial and office properties to create its portfolio. The firm was formerly known as Gramercy Capital Corp.

TheStreet Ratings: Buy, B-
TheStreet Ratings said: "We rate GRAMERCY PROPERTY TRUST INC (GPT) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, compelling growth in net income, good cash flow from operations and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • GPT's very impressive revenue growth greatly exceeded the industry average of 8.5%. Since the same quarter one year prior, revenues leaped by 195.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 100.8% when compared to the same quarter one year prior, rising from -$0.50 million to $0.00 million.
  • Net operating cash flow has significantly increased by 887.31% to $18.44 million when compared to the same quarter last year. In addition, GRAMERCY PROPERTY TRUST INC has also vastly surpassed the industry average cash flow growth rate of 0.73%.
  • GRAMERCY PROPERTY TRUST INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, GRAMERCY PROPERTY TRUST INC turned its bottom line around by earning $2.04 versus -$1.00 in the prior year. For the next year, the market is expecting a contraction of 91.7% in earnings ($0.17 versus $2.04).

 

HIW Chart HIW data by YCharts

7. Highwoods Properties Inc. (HIW)
Market Cap: $4 billion
Annual Dividend Yield: 3.98%

Year-to-date return: -3.8%
Highwoods Properties, Inc. is a real estate investment trust. The trust engages in leasing, management, development, construction, and other customer-related services for its properties and for third parties. It invests in the real estate markets of United States.

TheStreet Ratings: Buy, B-
TheStreet Ratings said: "We rate HIGHWOODS PROPERTIES INC (HIW) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, reasonable valuation levels, good cash flow from operations and increase in stock price during the past year. We feel its strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 56.4% when compared to the same quarter one year prior, rising from $12.76 million to $19.94 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.5%. Since the same quarter one year prior, revenues slightly increased by 7.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has slightly increased to $33.11 million or 5.48% when compared to the same quarter last year. In addition, HIGHWOODS PROPERTIES INC has also modestly surpassed the industry average cash flow growth rate of 0.73%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

 

 

 

KRC Chart KRC data by YCharts

8. Kilroy Realty Corp. (KRC)
Market Cap: $6.2 billion
Annual Dividend Yield: 1.99%

Year-to-date return: 1.2%

Kilroy Realty Corporation is a privately owned real estate investment trust. The firm engages in investment, development, and management of properties. It invests in the real estate markets of Southern California.

TheStreet Ratings: Buy, B-
TheStreet Ratings said: "We rate KILROY REALTY CORP (KRC) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, good cash flow from operations, solid stock price performance and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • KRC's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 18.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • KILROY REALTY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, KILROY REALTY CORP increased its bottom line by earning $0.51 versus $0.01 in the prior year. This year, the market expects an improvement in earnings ($1.02 versus $0.51).
  • Net operating cash flow has increased to $54.98 million or 21.95% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.73%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, KILROY REALTY CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.

 

SLG Chart SLG data by YCharts

9. SL Green Realty Corp.  (SLG)
Market Cap: $12 billion
Annual Dividend Yield: 2%

Year-to-date return: 1.7%

SL Green Realty Corp. is a real estate investment trust (REIT). The firm engages in the property management, acquisitions, financing, development, construction, and leasing. It also provides tenant services to its clients. The firm invests in real estate markets of the United States. The firm invests in real estate markets of the United States. It primarily invests in commercial office and retail properties.

TheStreet Ratings: Buy, B-
TheStreet Ratings said: "We rate SL GREEN REALTY CORP (SLG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SLG's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues slightly increased by 8.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has slightly increased to $90.96 million or 3.18% when compared to the same quarter last year. In addition, SL GREEN REALTY CORP has also modestly surpassed the industry average cash flow growth rate of 0.73%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • SL GREEN REALTY CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SL GREEN REALTY CORP increased its bottom line by earning $3.40 versus $0.68 in the prior year. For the next year, the market is expecting a contraction of 51.5% in earnings ($1.65 versus $3.40).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 68.6% when compared to the same quarter one year ago, falling from $149.83 million to $47.02 million.

 

 

 

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