Joseph Hogue recommends UDR Inc. (a residential REIT) despite higher interest rates impacting REITs, citing that high home prices and rates are keeping people renting longer. The company increased its dividend by 10% to a 4.1% yield, with a strong 1.5x funds from operations coverage, indicating dividend safety. It trades at 16 times FFO, which is considered cheap for an apartment REIT.
“UDR Inc ticker UDR now the multi-family apartment space is being pushed and pulled over the last year okay on the one hand higher interest rates have just destroyed real estate trust because that higher leverage they use it and shares here are down 32 percent over the past 15 months on the other hand those High home price increases and the higher rates really keeping people renting for a lot longer which should help protect this company and the cash flows and management just increased the dividend by 10 to 42 cents a share for a solid 4.1 percent yield.”