Can these 3 real estate investment trusts build your investment returns?

REITs build upon long-term growth and value.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Property is a cyclical business, sometimes booming and other times it can be flat for years. As an investor you should seek a good mix of stable dividend income that real estate investment trusts can offer.

When residential or commercial property markets weaken, you have that to fall back on. As they begin to come back, the market takes notice and share prices can rise in a short time.

We're seeing that now as the residential property market is growing. In time, commercial properties will rise as well, but the two different groups don't have the same cycle.

GPT Group (ASX: GPT) has retail, office, logistics and business park properties in its portfolio. Its dividend yield is 5.6%. Since 2010, annual dividends per share have risen due to higher revenues.

In addition, it has been buying back shares since 2011 and continues now. This will improve dividends per share proportionately. Returns on equity and investment are 8.3% and have been improving in the last three years.

In May 2013, its share price hit a $4.23 peak and it recovered from a $3.38 low in December. It's $3.69 now and its PE is 12.1.

Property investor and developer Mirvac Group (ASX: MGR) has a dividend yield of 5.2% and over the past three years underlying net profit has been rising. In FY2013, it achieved about 1,800 residential lot settlements, ahead of its target.

In the first half of FY2014, 1,032 lots settled and its FY2014 target has been raised to more than 2,300 lots. The company achieved a record $1.5 billion in pre-sales. The rising housing market is lifting housing construction.

Since mid-2012, its share price has climbed from about $1.25 to $1.71 currently. Its PE is 14.

Charter Hall Group (ASX: CHC) manages investments as well as doing property development. It has a variety of investment funds that have a focus on a superannuation industry client base. Its dividend yield is 5.2% and over the past three years it has raised its annual dividend.

It has returns on equity and investment both at 9.7%. In the first half of FY2014 operating earnings were up 13.1% on the prior period. Property funds management rose more than property investments. Its outlook is to raise equity for investments that will achieve its target of funds under management (FUM) growing 6%-10% annually.

From July 2012, it has risen in share price from about $2.20 to $4.02 currently.

Foolish takeaway

Investing in real estate investment trusts can be a way for your portfolio returns to have a solid foundation over the long-term. Over many years property values can go up further than people realise.

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »