The stock market has experienced a new bottom dating back to 2022, and all three of the major stock market indices are now firmly in a bear market. And when the market turmoil intensified, numerous top dividend equities were also beaten down, even though this year’s losses began mostly with growth firms.
Here are two equities that now appear to be very appealing from a long-term standpoint. Both of these stocks are real estate investment trusts, or REITs.
Don’t let a short-term problem scare you away
With a 9% dividend yield and close to $1.2 billion in cash, EPR Properties (EPR 0.08%) is a very intriguing investment right now. This is a significant level of financial flexibility for a business with a total market value of less than $3 billion.
On the one hand, the real estate investment trust is currently facing a serious issue. Due to Cineworld’s bankruptcy, its second-biggest tenant, Regal Entertainment, is shutting cinemas. Although it often closes its older, less successful theaters, there is a chance that the scenario might have an impact on EPR’s rental income.
Nevertheless, it’s crucial to keep things in perspective. Regal generates less than 15% of EPR’s income, and as EPR frequently owns more modern and upscale theaters, any vacant spaces would probably attract new tenants from other theater companies. Additionally, EPR is a very lucrative company, with its present dividend only accounting for 73% of this year’s anticipated FFO (funds from operations, the REIT version of earnings). I’m pleased to receive a 9% return as the scenario develops since experiential real estate has a lot of potential for EPR to pursue in the upcoming years.
Outdoor marketing will continue to exist.
It’s simple to overlook some of the more classic kinds of promotion in today’s dynamic world of digital marketing. However, after plummeting nearly 45% from its previous high, Outfront Media (OUT -1.00%) is one example of an advertising company that is worth a look.
If you are unfamiliar, Outfront manages two primary forms of advertising: transportation networks and billboards. As you can expect, business wasn’t fantastic during the pandemic shutdowns, particularly in the area of the transportation system. Outfront’s sales increased 32% year over year in the second quarter, but this isn’t a very good comparison, so take it with a huge grain of salt. Additionally, there may be some difficult times ahead for the advertising sector. Businesses typically put the brakes on their advertising spending during recessions or other challenging economic times.
These, however, are passing difficulties. In particular, Outfront has a significant long-term growth opportunity with the digitalization of its billboard business (digital displays bring in far more revenue than static displays). Additionally, the stock’s 7.2% dividend yield is now adequately covered by its most recent FFO.