There’s something nice about being able to buy a bunch of shares of a stock instead of just a couple. Just ask Apple (NASDAQ: AAPL). Apple stock has split five times since it went public on Dec. 12, 1980, most recently on a four-for-one basis last Aug. 28. That brought the price from about $500 a share to about $125 a share.
Apple says the idea is to give more people access to their stock, to encourage new investors. Of course, the company and its investors hope the return is more than just bringing new folks into the fold, but the argument does make sense. After all, a share or two of Apple stock is a nice graduation gift, right?
Blue chips can be costly, but there are many cheaper choices
Getting the young folk engaged in good ol’ American capitalism is a fun gift, and so is gifting yourself with some new investments.
But in these days of stock shares going for hundreds and thousands of dollars for some of the bluer chips out there -- for example, about $2,300 for Alphabet (NASDAQ: GOOGL) and $3,300 for Amazon (NASDAQ: AMZN) -- it can be pricey.
But it doesn’t have to be. Real estate investment trusts (REITs) can be an ideal vehicle for beginning investors and everyone else, with their required profit pass-throughs in the form of cash dividends, easy-to-understand business models (usually), and (again, usually) relatively stable performance.
Plus, there are many to choose from with stock prices of well below $100. Here are three REITs for you toe-dippers out there, each from a different industry segment.
AGNC Investment Corporation
AGNC Investment Corp. (NASDAQ: AGNC) is the largest of the mortgage REITs, which make their money on mortgages, mortgage-backed securities, and related assets. Bethesda, Maryland-based AGNC itself is a bit of a pure play in this niche, putting its money primarily into mortgage-backed securities from Fannie Mae, Freddie Mac, and other government-sponsored enterprises (GSEs).
The company makes its money on the spread between what it borrows to buy securities and the interest it makes on the securities it owns. It can be a tricky business, to be sure, especially when interest rates themselves are volatile.
That said, AGNC nicely fits the bill for our look at sub-$100 stocks, trading at $18.04 mid-day on May 5 while yielding 8.05% on an annual dividend yield of $1.44 per share.
Our Liz Brumer takes a forward look at AGNC here: “Where Will AGNC Investment Corp. Be in 3 Years?”
Plymouth Industrial REIT
Plymouth Industrial REIT (NYSE: PLYM) is just that: an industrial REIT. That’s a broad category that includes manufacturing, warehouses, and self-storage facilities, for starters. These REITs often play a key role as landlord to some of the biggest players of all, like e-commerce megalith Amazon.
Boston-based Plymouth is a smaller REIT than many in its segment but does well with a portfolio that currently includes 173 buildings in primarily secondary markets that it thinks promises faster growth and better returns than the major markets where its larger competitors are focused.
Plymouth Industrial REIT was trading at $17.97 a share mid-day on Cinco de Mayo, while yielding 4.32% on an annual dividend of $0.80 per share.
Our Matthew DiLallo takes a deeper look at Plymouth REIT and one of those competitors in this: “Better Buy: Plymouth Industrial REIT vs. Monmouth Real Estate.”
STORE Capital Corporation
STORE Capital Corp. (NYSE: STOR) is a widely held retail REIT, meaning it specializes in properties occupied by retail tenants. That’s a broad category, of course, and STORE has a broad portfolio indeed, with 2,634 locations in 49 states, locations occupied by 519 different businesses in 116 different industries.
Scottsdale, Arizona-based STORE takes its name from Single Tenant Operational Real Estate, and it’s a net lease REIT, too, which means the tenant is responsible not only for the rent, but also for property taxes, maintenance, and other expenses, depending on the lease. It’s worked out well.
STORE stock was trading at $35.01 a share mid-day on May 5, with a yield of 4.00% on an annual dividend of $1.44 a share.
Our Matt Frankel tells us here why STORE Capital is one of his favorite stocks: “I’ll Be Surprised if This REIT Doesn’t Double in Value.”
The Millionacres bottom line
Apple says a share of its stock bought for $22 on that fateful day in 1980 now has a split-adjusted cost basis of $0.10. That’s right. A dime for a share of stock that at mid-day trading on May 5 was worth $129.70.
Now, a low share price doesn’t mean a mind-boggling return. But it is a nice way to get started in investing in the first place, as a gift for a young person, for instance, or just for yourself to add to an existing portfolio.
And there’s certainly no shortage of strong contenders below the $100 price point. We hope these three REITs give you a start.