3 REITs I’d Consider Buying for Long-Term Second Income

Real estate investment trusts (REITs) may be one of the best stocks to consider for second income. This is because:

• REITs are required by law to distribute at least 90% of rental income as dividends.
• Property values ​​and rental income often rise with inflation, providing a buffer against rising costs.
• REITs often lock their tenants into long-term contracts, resulting in reliable rental flows.
• They are managed by experts who can maximize property values ​​and rental flows.

Today, investors can access REITs spanning multiple sectors and geographies. As such, they can be a great way for stock pickers to balance risk and take advantage of different investment opportunities.

Please note that tax treatment depends on each client’s individual circumstances and may be subject to change in the future. The contents of this article are provided for informational purposes only. It is not intended to and does not constitute any form of tax advice.

Here are three REITs I’ll consider buying the next time I have money to invest.

Warehouse logistics

Forward dividend yield: 7%

Warehouse operators such as City logistics (LSE:SHED) play a key role in the modern economy. This company owns 130 assets with a total area of ​​9.7 million square meters. ft., making it one of the largest in the UK in terms of area.

Demand for storage and distribution centers has skyrocketed over the past decade, causing rents to skyrocket. Urban Logistics’ latest financial statements showed like-for-like rents rose 21% between April and September, driven by 13 “lease events” (such as contract renewals).

I think the long-term outlook here remains attractive for several reasons. These include the rise of online shopping, post-Covid restructuring of supply chains and the growing role of robotics.

However, problems with rent collection and occupancy could arise during any future downturn.

PRS RATE

Forward dividend yield: 4%

As the name suggests, PRS RATE (LSE:PRSR) specializes in the private rental sector.

This can have significant benefits for investors. Residential real estate is one of the most resilient in the economic cycle, and a chronic housing shortage means rent levels continue to rise.

Rents have dropped recently due to tenant availability. But they are projected to continue to rise in the long term due to robust population growth and an outflow of rental property investors. Indeed, a real estate agency Savills predicts private sector rents will rise by 18% over the next five years.

Government plans to increase the pace of housing construction by 2029 may undermine this forecast. However, overall things continue to look good for landlords like PRS.

That’s why the business continues to expand steadily, with its portfolio growing 6% year on year – to 5,425 homes – as of September.

Supermarket REIT Income

Forward dividend yield: 9%

Supermarket REIT Income(LSE:SUPR) is another safe haven asset that I like. People need to be fed at all stages of the economic cycle, ensuring businesses have reliable rent streams no matter what happens.

In addition, the company leases its 73 properties only to the largest players in the grocery industry. This includes such as Tesco, Sainsbury’s and Waitrose in the UK, and more recently Carrefour in France. As a result, the likelihood that he will not be able to collect rent is practically zero.

The growth of e-commerce poses an obvious threat to the company. However, by focusing on omnichannel supermarkets that serve customers online and in person, Supermarket Income significantly reduces this danger.