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Real estate investment trusts (REITs) allow investors to invest in commercial real estate without actually buying and managing properties. They typically offer high yields and distribute at least 90% of their income to their investors, making them appealing choices for income investors looking to diversify a portfolio. Now, with the Federal Reserve likely having ended rate hikes and rate cuts on the horizon, REITs are expected to see a recovery.
Let's take a look at some REIT stocks for which analysts have big expectations for the rest of the year and into the next.
| Stock | Mean Target | Upside |
| Community Healthcare Trust Inc. (NYSE: CHCT) | $25.67 | 42.2% |
| Host Hotels & Resorts Inc. ( NASDAQ: HST ) | $21.33 | 30.7% |
| Hudson Pacific Properties Inc. ( NYSE: HPP ) | $6.40 | 37.0% |
| New York Mortgage Trust Inc. ( NYSE: NYMT ) | $7.75 | 23.4% |
| Park Hotels & Resorts Inc. ( NYSE: PK ) | $19.00 | 34.5% |
| RLJ Lodging Trust (NYSE: RLJ) | $12.44 | 36.9% |
| Ryman Hospitality Properties Inc. (NYSE: RHP) | $127.50 | 26.2% |
So, as far as Wall Street is concerned, Community Healthcare Trust has the greatest potential upside in the coming year of these stocks. Does that mean that its shares are undervalued? Or perhaps one overzealous analyst has skewed the mean?
Why Invest in Community Healthcare Trust?
A big dividend and high expectations.
Community Healthcare Trust stock is down over 6% from its 2015 initial public offering (IPO) share price. Shares traded for more than $50 a share in 2021. The company attributes its steady asset and dividend growth since inception to a disciplined approach coupled with a conservative, easy-to-understand debt structure and balance sheet. And it offers a 10.2% dividend yield. The stock was in retreat even before the recent pullback, but is it poised for a bounce back? What does Wall Street expect?
Community Healthcare Trust, the Company
Investing in health care properties.
This fully-integrated health care real estate company owns and acquires real estate properties that are leased to hospitals, doctors, health care systems, or other health care service providers. As of March 31, 2024, it had investments of approximately $1.1 billion in 197 real estate properties, including a portion of one property accounted for as a sales-type lease with a gross amount totaling approximately $3.0 million and two properties classified as an asset held for sale with an aggregate amount totaling approximately $7.5 million. The properties are located in 35 states, total approximately 4.4 million square feet altogether, and were approximately 92.3% leased, excluding real estate assets held for sale, with a weighted average remaining lease term of approximately 6.9 years.
Community Healthcare Trust headquarters are in Franklin, Tennessee. The company was founded in 2014 and went public a year later. Competitors include Healthcare Realty Trust Inc. ( NYSE: HR ) and Global Medical REIT Inc. ( NYSE: GMRE ).
In July, the REIT boosted its quarterly dividend but shortly thereafter posted disappointing second-quarter results. The report prompted at least one downgrade and lowered price targets. The company also reported first-quarter results that fell short of estimates, along with a dividend hike. In fact, it regularly boosts its payout in each quarter. Furthermore, it released its inaugural corporate sustainability report in May.
Community Healthcare Trust, the Stock
Is the stock ready to bounce back?
The share price sank to a multiyear low of $17.84 after the quarterly report. It is down about 32% year to date, while the S&P 500 is up more than 12% in that time. Note that the $25.67 consensus price target is less than the 52-week high. The consensus recommendation remains to buy shares. It was Evercore ISI that downgraded the shares, to Underperform, but Baird has maintained a Neutral rating and Truist Securities maintained a Buy rating.
Institutional investors hold about 90% of the shares. BlackRock and Vanguard are beneficial owners, while Macquarie and State Street also have notable stakes. Almost 27 million shares, or a little more than 2% of the float, are held short. Note that CEO David Dupuy and two other directors took advantage of the dip to pick up a combined 19,000 shares.
Wall Street expectations for where the stock goes in the next 52 weeks vary but are all positive and signal plenty of room to run.
| Low target | $21.00 | 16.3% |
| Mean target | $25.67 | 42.2% |
| High target | $30.00 | 66.2% |
Wall Street is optimistic when it comes to price targets and earnings estimates, but the company will need to boost performance to keep up the enthusiasm. That insiders are buying the dip and the relatively low short interest are also good signs. Other reported risks include the company's reliance on technology and tenants that declare bankruptcy. Health care industry trends, such as an aging population, are seen as tailwinds.
5 Blue Chip REITs Deliver Huge and Dependable Monthly Dividends
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