UDR - Bull Market Buys: 3 S&P 500 Dividend Stocks to Own for the Long Run
2024-06-15 04:04:00 ET
The S&P 500 Index is currently yielding a scant 1.3% or so. That's a very low number, but you can do much better if you dig into the index and cherry pick good companies with relatively high yields. Three stocks that should be on your list as potential long-term holdings are UDR (NYSE: UDR) , T. Rowe Price (NASDAQ: TROW) , and Realty Income (NYSE: O) . Here's why.
At the end of the day, UDR is a fairly boring real estate investment trust (REIT). It owns around 60,000 apartments in communities in both urban and rural areas. Notably, around 25% of rents comes from the faster-growing Sunbelt region of the country, with 35% from the West Coast, and 40% from the Northeast. It also has exposure to both high-end (A level assets) and middle-rated (B level assets) apartment complexes. In other words, UDR is spreading its bets around in an attempt to create a portfolio that can survive through the typical property cycle.
Right now, things are tough. A glut of new apartments has led to a difficult rental market at about the same time that interest rates have risen, which increases expenses. Investors are worried, pushing the share price down and the dividend yield up to 4.2%. That's near the highest levels of the past decade, which hints the UDR is on sale right now. But here's the interesting thing: UDR is telling investors quite clearly that things will improve soon because the number of new apartments opening up for business is set to slow over the next couple of years. If that comes to pass, Wall Street's view of this REIT is likely to improve materially.
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Bull Market Buys: 3 S&P 500 Dividend Stocks to Own for the Long Run