Taubman Centers, Inc. (TCO), Equity Residential (EQR): A Few REITs to Consider for Your Portfolio

Equity Residential (NYSE:EQR) is expected to grow in-line with, or maybe a bit more than, the rest of the industry. That should help generate enough cash to allow the dividend to keep flowing to investors. The stock currently yields a tidy 3%.

Hotels

Because of high capital costs associated with building and maintaining hotels, REITs in this segment may not be as good to invest in as malls and apartments. Operators have to plow more of the cash it earns back into the business to keep up the properties. Theoretically, this means lower returns for shareholders.

However, in spite of this, some have done reasonably well.

One of them is RLJ Lodging Trust (NYSE:RLJ) which owns 147 hotels and just added a few more properties in Houston, a key location for them. Earnings, revenue, and even the dividend have grown modestly over the last two years. The company recently reported net cash flow of $34 million, up from $10.5 million during the same period last year. RLJ also increased its outlook for the rest of the year.

A potential negative is a P/E of 44. The stock may not be a value play right now.

Conclusion

One way to profit from the uptick in real estate besides actually owning a property is to buy stocks of companies known as real estate investment trusts (REIT).

I identified a few above. They operate malls, apartment buildings, and hotels, among other types of buildings. In addition to share price appreciation, most offer healthy dividends which provide income.

The article A Few REITs to Consider for Your Portfolio originally appeared on Fool.com and is written by Mark Morelli.

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