If your plan is to take out an annuity, it’s out of your control as you do not what rate you will be offered when your retire. It could be.
Canada Life figures show the 65-year-old with a £100,000 pension pot could buy an annuity linked to the retail price index (RPI) that would generate a starting annual income of £3,896. That’s up from £2,195 in the New Year following a 77% spike in rates this year. Oct 22
It could be more or it could be less, a huge gamble which will effect the rest of your life.
Using the 4% rule, recent studies state that 4% may be too high but we will go with the figure. Again you can’t control the final amount you will have in your portfolio.
Latest comparison if your plan is for the tail and not the body, you fail by the month with a dividend re-investment plan.
The snowball
2025 Income £9,120.00
Dividend total for the quarter ending 30 Sep £9,794.00. Do not scale to reach an end of year figure as it includes a special dividend from VPC.
Comparison share VWRP £145,534. Not too shabby but a ‘pension’ of £5,821 using the 4% rule. The figure could be higher at the end of the year or it could be lower.
Almost nothing saved? Here’s how you can still build a second income portfolio by investing
Millions of Britons have almost nothing saved, but that doesn’t mean they can’t start working towards a life-changing second income from today.
Posted by
Dr. James Fox
Published 29 September
Image source: Getty Images
When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.
The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.
Many people assume that without a large pot of cash already saved, the dream of generating a second income from investing is out of reach. But the reality is that even starting from almost nothing, a disciplined approach can still build a meaningful income stream over time.
The key lies in consistency. Let’s imagine a new investor can put aside just £250 a month into a Stocks and Shares ISA. That’s £3,000 a year. If those funds are invested in a diversified portfolio that generates an average annual return of 7%, the portfolio could grow to around £125,000 after 20 years.
At that point, drawing a 5% income from the portfolio would provide more than £6,000 a year. While it may not replace a salary, it represents a valuable supplementary income stream, particularly in retirement.
Of course, the more we contribute and the more successful we are at investing, the larger the end figure. Indeed, £500 a month in contributions could build a pot in excess of £250,000 in the same timeframe, potentially generating over £12,000 annually at a 5% withdrawal rate.
The strategy isn’t about chasing quick wins, but about harnessing compounding. There are risks, of course. Stock markets are volatile, and returns are never guaranteed. But history shows that patient, regular investing has rewarded those who stick with it.
Even if starting with almost nothing, consistency and discipline can transform modest monthly contributions into a powerful second income portfolio over the long term
These 6%- to 13%-Paying Landlords Love Jerome Powell Right Now
Brett Owens, Chief Investment Strategist Updated: September 26, 2025
The Fed has finally cut rates, and if the “dot plot” is any indication, it won’t be the last. This is fuel for real estate investment trusts (REITs)—they thrive when borrowing costs fall and their fat dividends shine next to shrinking bond yields.
Today we can lock in payouts between 6% and 13% from landlords set to surge as Powell’s long-awaited pivot plays out.
Why do REITs rally as rates fall? These stocks act as “bond proxies” that move alongside bonds and opposite rates. Here is a major REIT ETF plotted against the 10-year Treasury yield. As you can see, when the important rate zigs, the REIT benchmark zags:
REITs Zig When Rates Zag
Rate cuts don’t always hit the 10-year overnight. But the direction is now clear—and history shows that REITs rally once the bond market adjusts. So, let’s look at a lineup of landlords yielding up to 13.3% that are ready to ride Powell’s pivot higher.
We’ll start with Healthpeak Properties (DOC, 6.5% dividend yield). Healthpeak owns 702 properties across outpatient medical, labs and senior housing. This blend has weighed on 2025 results because labs have been weak. However this “property patient” has perked up since August, when a sad jobs report foreshadowed the September rate cut.
In other words, the Fed is driving this rebound:
Healthpeak: Riding High on Rates Over Fundamentals
Broadstone Net Lease (BNL, 6.3% dividend yield) specializes in single-tenant commercial properties. Currently, its portfolio is made up of 766 properties in 44 states and four Canadian provinces, leased out to a whopping 205 tenants representing more than 50 industries.
Its blend looks a lot different than it did even a year or two ago—Broadstone has been actively shedding healthcare properties, which made up roughly 20% of annualized based rent back in 2024 but now accounts for less than 4% of ABR. Today, industrial makes up roughly 60% of ABR, retail accounts for more than 30%, and office buildings drive most of the remainder.
Broadstone deals in “net leases,” where tenants cover taxes, insurance and maintenance costs. BNL just collects rent. Those long-term leases, with built-in 2% rent escalators, deliver the steady cash flows we want from a landlord.
I said more than a year ago that although its transformation might weigh on earnings in the short term, “the renewed portfolio focus is a benefit to BNL.” At the time, insiders thought so too.
All of us were right.
But Broadstone’s Success Is Missing One Critical Component
Broadstone’s doing a lot that we can like. It looks like it’s handling the bankruptcies of tenants At Home and Claire’s in stride. Management expects that its burgeoning build-to-suit pipeline will reach its $500 million end-of-year goal.
But it’d be nice to see BNL share the wealth. The company recently updated its full-year guidance for adjusted funds from operations (AFFO), expecting $1.48 to $1.50 per share. It’s on track to pay $1.16. BNL could easily boost its dividend. Management just hasn’t shared the wealth yet.
Global Net Lease (GNL, 9.4% dividend yield) is another commercial net-lease operator, and it has a significant international bent.
GNL’s 911-property portfolio spans 10 countries. North American operations (U.S. and Canada) account for 70% of straight-line rents; eight European companies account for the remaining 30%. The average remaining lease term isn’t as long as Broadstone’s, at just over six years, but it does utilize rent escalators, which are on 88% of leases.
Global Net Lease has also been busy trying to improve its operations. It recently completed the $1.8 billion sale of its multitenant retail portfolio, which improved overall occupancy and improved its annualized net operating income (NOI) margin. It has been buying back stock. And it has been rapidly deleveraging—GNL has shed $2 billion in net debt in roughly a year. During the company’s most recent earnings call, CEO Michael Weil noted that “S&P Global upgraded our corporate credit rating to BB+ from BB and raised our issuer level rating on our unsecured notes to investment-grade BBB- from BB+.”
The stock has been doing exactly what we’d expect in the midst of that kind of turnaround, beating the pants off the real estate sector year-to-date.
But There’s Still a Big Black Mark We Need to Talk About
GNL’s past payout cuts weren’t by choice—they were survival. Dividend coverage looks fine today, but only if cash flow keeps climbing.
A couple “hybrid” REITs—Armada Hoffler Properties (AHH, 7.7% dividend yield) and Brandywine Realty Trust (BDN, 13.3% dividend yield) are benefiting from a one-two punch: declining rates and return-to-office mandates.
But both cut payouts this year and their balance sheets leave no margin for error:
2 Big Yields, But 2 Very Recent Distribution Cuts
Armada Hoffler kicked off 2025 with weak guidance and a quick dividend cut. It’s still on pace for a significant drop in FFO, and its guidance hasn’t changed, but the most recent quarter saw at least a few green shoots, including a slight improvement in same-store cash NOI growth.
Brandywine, while a hybrid REIT, is much heavier in office influence. BDN owns 63 properties representing ~11.8 million rentable square feet, and office space accounts for just less than 90% of each (56 properties representing ~10.4 million rentable square feet).
Joint ventures have been Brandywine’s Achilles’ heel of late; some of its development deals force BDN to recognize numerous costs until the projects become profitable, and that has resulted in significant downward revisions to FFO estimates. Relief could be on the way, though, as several JVs could be recapitalized in coming quarters. Brandywine also secured a massive deal with Nvidia (NVDA), which will occupy nearly 100,000 square feet in BDN’s One Uptown development in Austin.
But let’s keep a really close eye on the dividend. The payout was 107% of FFO through the first half of 2025, and full-year FFO are expected to just barely pay for the dividend. If Brandywine runs into liquidity issues, that 13%-plus yield could be a rug-pull just waiting to happen.
This year’s fcast is for year 5 of the plan and the fcast for 2026 is year 6 of the plan.
For those luckily enough to have longer to compound your dividends, at a yield of 7% your income doubles every ten years, so the long term target would be 25k. A yield of 25% for you ‘pension’. Remember to allow for inflation.
I don’t plan on retiring, but financial independence is crucial. With Social Security’s future uncertain, we must take control of our own retirement planning.
My strategy focuses on building a core of reliable, high-yield stocks. I avoid risky “sucker yields,” targeting a safe 5-6% from companies with strong, predictable growth.
I present four dividend stocks that create a foundation of durable income. It allows for stability while leaving room for more aggressive investments to pursue higher returns.
Drew Green/iStock via Getty Images
Introduction
The other day, someone told me something like, “Why do you spend so much time discussing retirement investments? You’re never going to retire, anyway!”
It’s a fair question, for a number of reasons. The first one is that, as I have written in a few articles, I am indeed not ever planning on retiring.
Although I have no idea what the future holds when it comes to AI disruption, my health, and other circumstances, I would love to do what Buffett and so many others do, which is work until it’s no longer humanly possible. After all, my work is based on writing research on a computer. I’m not a construction worker or a Texas roughneck. That’s a huge difference.
Even Maurice Greenberg, the 100-year-old who landed on D-Day in France during the Second World War, fought in the Korean War, and became the successor of AIG founder Cornelius Vander Starr, still works. Roughly ten years ago, he made a big comeback with a multi-billion-dollar insurance takeover. He was 90 at the time.
Obviously, I’m not comparing myself to people like Buffett and Greenberg. All I’m saying is that I’m a workaholic. I haven’t had a trip (some call it “vacation”) in more than a decade where I did not spend every day working on a project, article, or similar endeavour.
The other reason I am not a huge fan of talking about my own retirement is motivation. Striving for the goal of financial independence is a great thing, don’t get me wrong. It eases some anxiety, as I will soon be able to stop working if I decide to, technically speaking.
However, on top of the fact that I would do exactly what I am doing right now if I suddenly got really wealthy, I also believe that not having a safety net is better for progress. Personally, I have never been more productive than in the years after I completely wrecked my trading portfolio while being in college. Back then, I traded leveraged bonds. It went really well until it didn’t, and the countermove destroyed my stop losses, leaving me with a hole that took me at least a year to fill.
The good news is that it caused me to rethink my entire strategy and work hard to become a better investor. It led to everything I am doing now.
Ok. That’s enough about me.
The reason I promised readers to focus more on retirement stocks is based on my belief that owning higher-yielding value stocks, in general, is a good idea, and because retirement planning is critical, given increasing pressure on Social Security, as I wrote this month.
Essentially, Social Security cash flows have become a disaster since the Great Financial Crisis, with increasing deficits and funding requirements, which could lead to cuts down the road and changes like delayed retirements and other regulatory changes.
CATO Institute
As the CATO Institute wrote in its warning report, it may be important for people to take more control of their own retirement. As I am someone who is expected to get close to zero from my country’s Social Security and other pension plans, I could not agree more with that.
What if, instead of replacing earnings in old age regardless of need, Social Security was a basic safety net? And what if, instead of relying so heavily on a government program for income in retirement, Americans could own and control more of their own retirement savings, with Social Security acting as a poverty backstop? This reimagined Social Security system would be far from ideal but substantially better than the current unsustainable system. – CATO Institute
In this article, I’ll focus on that and present a few investments that I trust so much, I could make them the core of my retirement portfolio.
So, let’s dive in!
How To Take Control Of Your Own Retirement?
I’m not a financial advisor. And even if I were, I could not give you personal advice, as this article is read by a huge range of different investors. Some are multi-millionaires with second and third homes. Others are barely making ends meet and investing as much as they can to somewhat improve their cash flows. Meanwhile, others have lived paycheck to paycheck their entire lives, while others have enjoyed big tailwinds like inheritances.
For example, if you inherit a home in Contra Costa County, California, you would likely look at a windfall of close to $800,000, based on the average home price in that region, as we can see below.
Zillow
That’s why even during retirement, some can increase their wealth, others manage to keep it steady by generating enough cash flow, while others have to sell assets to cover expenses.
JPMorgan
Anyway, my point is that everyone has different needs, which makes this topic so complex.
That’s why Fidelity made a roadmap. It all starts by asking how much money you need.
What lifestyle do you want to maintain?
What will your average monthly expenses be?
What about the risks of unexpected costs?
Have you thought about health expenditures?
What about retirement home costs (if needed)?
Do you have a pension?
What about 401(k)s?
What percentage of expenses will be covered by Social Security?
Fidelity says we should try to follow the 10x, which suggests we need to save 10x the salary we expect to make before we start retirement. If you make $80,000 a year, that number is $800,000. If you make $120,000, that number is (you guessed it), $1.2 million.
Fidelity
Now, the tricky part is that we need to incorporate wage growth and inflation. If you’re a 20-year-old college student reading this, you’ll have to factor in close to 50 years of inflation and wage growth. Just imagine what the average income will be in the year 2075 and how high your annual expenses could be. A million dollars by then won’t get you far.
Heck, depending on where you live right now, a million isn’t much either. While a million dollars makes you a king in countries like Albania, a 5-7% yield on that amount makes you lower-middle-class in areas like the San Francisco Bay Area (let’s stick with that example).
Here are some costs to keep in mind (based on Fidelity findings):
Health expenses (excluding long-term care) for retirees could be north of $170,000. That’s the total. Not per year (obviously). Personally, these costs freak me out the most, as I am currently witnessing just how stressed the healthcare system is getting in nations like the Netherlands, Germany, and other developed places. I can only imagine the premium hikes my insurance will execute if this continues.
As we can see below, healthcare is one of the few costs that will rise as we get older. Meanwhile, other costs like travel, entertainment, transportation, and food decline.
JPMorgan
Another factor is inflation. Between 2009 and 2021 (more or less), inflation averaged less than 2.0%. In addition to paving the road for huge stock market gains, it also made retiring much easier. As I believe in “higher for longer” interest rates and inflation, I think we need to work at least with a base of 3-4% annual inflation.
Federal Reserve Bank of St. Louis
To show you how big a deal small inflation changes are, let’s use the inflation calculator.
The purchasing power of $100,000 in 2025 equals $122,000 after 10 years based on 2% inflation. A 3% inflation rate brings that number to $134,000. That’s a 10% difference.
Longevity is another fascinating topic. Some people may have to fund three decades of retirement. Just imagine what can happen during these years. Think about all the technologies that were invented over the past ten years and how these disrupted markets. The Internet, AI, smartphones, etc. This means we need to buy the right assets that have competitive advantages and inflation protection. Also, if people can afford it, I always suggest that people keep investing for growth even after reaching retirement age. Bear in mind that Buffett generated the overwhelming majority of his wealth after reaching the legal retirement age, as the non-updated chart below shows.
Again, Buffett is a special case, but I think you get my point. Even a 2% dividend yield turns into a yield on cost of nearly 7% when compounded at 10% per year for two decades. If the stock price keeps up with these growth rates, it’s also a blessing for one’s total net worth.
What’s your risk profile? I have met people who have lost sleep over a 25% equity fund. I also know people who have the overwhelming majority of their multi-million net worth in crypto, tech stocks, and real estate, who don’t even break a sweat when things go down 20-40%. On top of prudent financial planning (what do I need in the future?), it’s a mindset thing.
See, the higher the risk, the higher the return. An “aggressive growth” portfolio of 85% equities returns close to 10% per year, historically speaking. However, during really bad recessions, it can temporarily lose more than half of its value (Great Financial Crisis).
A portfolio of 20% equities returns less than 6.0% per year. However, the odds of a steep decline are super low, as we can see below. Then there’s anything in between.
Fidelity
Interestingly enough, though, on a long-term basis, the odds of losing money with an aggressive stock portfolio are zero. Since the inception of the stock market in the U.S., nobody has ever experienced negative returns on a 20-year basis.
Could it change? Yes. Is it likely? No.
This is one of the reasons why I’m an “equity guy.” Instead of bonds, I would rather buy bond-like stocks like utilities, consumer staples, and REITs, which brings me to the next part of this article.
The 4 Stocks I Would Trust As A Core
Last month, I wrote an article titled “The Only Retirement Investing Strategy I Would Trust With My Future.” It was about building core holdings that bring income and stability. Once that has been taken care of, investors can use smaller holdings to increase their return or income profile. Right now, these could be investments in AI, the energy transition, economic re-shoring, or other ideas.
Leo Nelissen
For most people, the core should consist of ETFs, as these provide the best diversification benefits. By buying 2-3 ETFs, investors can buy high-yield dividend income, bonds, and even higher-growth dividend stocks like the Vanguard Dividend Appreciation ETF (VIG).
Vanguard
As I do not invest, I would buy ETF-like companies with diversification benefits, wide-moat business models (or other benefits), and the ability to provide consistently rising income.
In my case, I would aim for an average yield of 5.0% to 5.5%, which is a rate that has various benefits:
If I were to achieve this return, I could retire without having to buy high-risk income stocks.
By aiming for a mid-single-digit dividend yield, we can also incorporate lower-yielding dividend growth stocks.
Essentially, falling for a “sucker yield” is much harder in this area. If I were forced to buy double-digit income to fund my retirement, the story would be different.
Right now, my core would definitely include ONEOK (OKE), a company I have brought up in a number of articles this year. ONEOK is a C-Corp midstream company that does not issue a K-1 form. It owns a massive network of pipelines and related support operations in areas like the Permian Basin, where it generates substantial income in fast-growing markets like natural gas liquids, natural gas gathering/processing, and refined products (see below).
ONEOK
Like most companies, its revenues are mostly coming from fixed-fee contracts. That’s one of the biggest benefits, as these companies are not directly dependent on the price of oil, gas, and related commodities. As a result, ONEOK has grown its EBITDA for more than 10 consecutive years with a >16% CAGR since 2013. This includes the 2014/2015 oil crash, the 2020 pandemic, as well as the current oil and gas price weakness.
ONEOK
Through at least 2026, the company aims for mid-to-high single-digit annual EPS growth.
Currently, OKE yields 5.8%.
Its dividend has not been cut for at least 25 years and is expected to grow by 3-4% per year.
ONEOK
Interestingly enough, the yield is only so high because of recent stock price weakness. The company trades 40% below its 52-week high, as a result of weak oil prices. While this does not directly impact its revenues, the market has started to fear that prolonged subdued prices could hurt output. So far, this has happened every time during downturns and provided great opportunities.
Then there’s Getty Realty (GTY), a company I have never brought up. It has a yield of 6.9%, a payout ratio of slightly less than 80%, and is one of the biggest owners of convenience and automotive retail assets. This includes auto service centers, drive-through restaurants, and car washes in high-demand areas.
Getty Realty
Although some of these areas have elevated competition (think of car washes), the company has an excellent track record of occupancy (99.7% as of 2Q25), rent collection, and tenant rent coverage. This allowed it to grow its dividend by 5.1% per year since 2019.
Getty Realty
It also has an investment-grade credit rating, a net leverage ratio of 5.2x, and an average weighted lease duration of a full decade.
Another REIT I would add is VICI Properties (VICI), the owner of major Las Vegas Strip properties like MGM Grand, Caesars Palace, Park MGM, Mandalay Bay, New York-New York, and others. It has a triple net lease business model and 100% rent collection.
VICI Properties
Moreover, roughly half of its revenue is generated outside of Las Vegas, as the company is consistently diversifying into other entertainment areas with strong tenants, pricing power, and secular growth. See, while AI is disrupting the world, hard assets and entertainment are two areas I expect to thrive, as people want to enjoy life and spend on experiences.
VICI Properties
With that said, while Las Vegas is under fire from plunging visitor numbers that have triggered layoffs, I believe there is no risk to VICI, as the city suffers from a mix of weak consumer sentiment and the fact that most resorts have used premium pricing to boost margins.
The biggest risk is for the resort operators to bring back customers. All will rely on their assets. This shields VICI and its investors. It also makes for a better yield, as VICI now yields 5.7% with mid-single-digit annual dividend growth.
VICI Properties
Last but not least, I would add PepsiCo (PEP), a company I owned from 2020 until I sold it to free up cash for my Albania investment a few months ago (see this article). Currently yielding 4.0%, the company has been targeted by Elliott Management to improve its business.
The company, which owns some of the world’s most favorite snacks and drinks (think of Lay’s and Pepsi), is the biggest snack player in the world, with at least 20 billion-dollar brands that compete with companies like Coca-Cola (KO).
Elliott Management
Because of somewhat underwhelming growth and pressure on margins in recent years, the poor stock price performance has created the biggest discount in at least two decades, as we can see below. Trading at just 18x earnings, it trades at least four points below its long-term average.
Elliott Management
Now, Elliott sees a path to long-term double-digit earnings per share growth, which could benefit investors through higher earnings growth and a higher valuation. In the near-term, it sees upside of at least 50%, something I entirely agree on.
Elliott Management
Even better, because of its diversified business model, PepsiCo has always been one of my favorite consumer staples and a prime stock for a retirement account.
That’s also why I believe we could see consistent dividend growth in the 6-8% range.
To me, PepsiCo is now a Strong Buy.
Putting everything together, these four picks have an average yield of 5.6%, a fantastic number in light of growth potential and safety.
I look forward to your view on this, and I can tell you I will continue to build on this portfolio, as I have a lot more ideas I didn’t mention in this article.
For now, this is my takeaway:
Takeaway
I’m never retiring. At least, if it’s up to me.
However, that doesn’t mean focusing on retirement investing isn’t super important, especially as we are dealing with a wide range of risks like “higher for longer” inflation, the Silver Tsunami creating Social Security headwinds, and massive AI disruption.
That’s why I’m better safe than sorry when it comes to preparing for retirement.
In this article, I discussed four stocks I would make the core of my retirement portfolio, as they deliver an average yield of slightly more than 5.5%, healthy payout ratios, solid balance sheets, and business models that should provide me with inflation-beating dividend growth.
In the weeks and months ahead, I’ll provide more ideas and look for ways to incorporate more growth in a retirement portfolio, a subject I believe is often neglected
The real estate sector and REITs stand to gain from Fed easing.
Lower mortgage rates are expected to boost homebuying, while reduced financing costs could bolster commercial property values.
CBRE projects commercial real estate investment volume to increase by 15% in 2025, raising its forecast by 5% after the Fed rate cut.
According to a CenterSquare investment strategist, institutional investors have been waiting for this type of easing monetary policy environment to deploy assets into real estate.
SA quant identified five Strong Buy REITs poised to benefit in a rate-cutting cycle, with solid investment fundamentals, FFO generation, and high dividend yields.
I am Steven Cress, Head of Quantitative Strategies at Seeking Alpha. I manage the quant ratings and factor grades on stocks and ETFs in Seeking Alpha Premium. I also lead Alpha Picks, which selects the two most attractive stocks to buy each month, and also determines when to sell them.
Funtap/iStock via Getty Images
Is Real Estate Ready For A Rebound?
Residential and commercial real estate companies and real estate investment trusts (REITs) could stand to gain from the latest interest rate cutting cycle, which began earlier in September with similar cuts expected for October and February. Lower mortgage rates make houses more affordable and are likely to spur homebuying, while lower borrowing costs could prop up commercial property values, leading to more sales and lending.
Wall Street Journal
In a recent article, I highlighted how the 25 basis point cut may boost some sectors, offering consumers an opportunity to finance at lower rates. The commercial side of real estate may see the benefits of lower rates much more quickly, unlike home mortgages, which do not track the Fed’s moves directly. Much of commercial real estate is financed with shorter-term or floating-rate loans, which are more sensitive to interest rate cuts.
In the wake of the 2022 hikes, commercial property values fell over 20%, sales sank, and banks stopped lending. After the Fed announced the initial cut on September 17, real estate giant CBRE revised its forecast upward, citing lower borrowing costs. CBRE now projects commercial real estate investment volume to increase by about 15% in 2025 – up from its earlier projection of 10%.
Wall Street Journal
Falling short-term rates alone may not be sufficient for a full recovery if the 10Y Treasury yield remains elevated, keeping long-term financing costs high. Add to that risks and uncertainties from tariffs, stubborn inflation, and a softer labor market. That’s why investors should focus on REIT fundamentals – stocks with consistent operating results, reasonable valuations, and reliable dividends.
REITs Primed For A Rate-Cutting Cycle
Although real estate has underperformed the market in the past year, lower interest rates could spur capital inflows. According to CenterSquare investment strategist, Uma Moriarity, institutional investors have been waiting for this type of easing monetary policy environment to deploy assets into real estate. Moriarity also said that, historically, REITs tend to outperform core private real estate once the Fed starts a rate-cutting cycle. In fact, REITs had begun showing momentum ahead of the Fed rate cuts, with the FTSE Nareit All Equity REITs Index rising 3.3% in August.
Nareit
Health care has been the highest performing REIT sector year-to-date, with a total return of 21.3% – followed by diversified and gaming. Despite a rough market, REIT operating performance in Q2 2025 remained resilient, as they continued to deliver year-over-year growth in net operating income (NOI) – led by industrial REITs (+23.6% YoY).
Nareit
In addition to gaining a foothold in a sector that could benefit from interest rate easing, REITs can be a defensive haven when the market is volatile, due to their stable dividend income, tangible asset backing, and inflation-hedging properties. With these objectives in mind, SA Quant screened for high-yield REITs with exceptional fundamentals and found five poised to perform in a low-rate environment.
Top 5 REITs
SA Quant identified five Strong Buy commercial REITs that own a wide variety of properties, including hotels, casinos, senior housing, and industrial warehouses. The stocks on the list have outstanding collective investment fundamentals, robust FFO generation, and high earnings growth potential. The stocks also offer safe and high-yielding dividends, providing investors with downside protection in a volatile market.
Quant Sector Ranking: (as of 9/25/25): 4 out of 176
Quant Industry Ranking: (as of 9/25/25): 1 out of 15
Sector: Real Estate
Industry: Hotel & Resort REITs
Host Hotels & Resorts, the only S&P 500 lodging REIT, has ridden the post-pandemic leisure and travel rebound to deliver strong growth in revenue, FFO and AFFO – while offering investors stability with a reliable and growing dividend. The top quant-rated Hotel & Resort REIT, HST, has a portfolio of 80 hotels under major brands like Marriott, Hyatt, and the Four Seasons – concentrated in high-demand markets. By consolidating its focus even further on higher-end properties in recent years, Host has benefited from substantial out-of-room revenue from both guests and non-guests.
HST Investor Presentation
Higher room rates across the portfolio and greater spending on food, beverage, and services drove Q2 revenue, up 8.2% year-over-year to $1.59B, and helped HST beat earnings for the sixth straight quarter. Healthy transient leisure demand and the continuing recovery in Maui more than offset a decline in group demand, while improvements in room rates offset rising wage expenses. HST lifted full-year EBITDA and revenue guidance, citing outperformance in H125, hotel operational improvements, and expected growth in Maui.
HST’s FFO has surged by a CAGR of ~47% in the past 3 years, driving an A Growth Grade, while exceptional interest and dividend coverage ratios underpin a quality profitability score. HST also offers a stable and rewarding dividend, sporting a yield of 5.18%. Impressive payout ratios support the company’s ‘A’ Dividend Safety Grade while a 3Y CAGR of 115% contributes to a top-notch Dividend Growth Grade. HST’s dividend consistency grade took a hit after the company suspended payouts in mid-2020, preserving cash as it dealt with the fallout from the pandemic. Host’s dividend has grown steadily since it was reinstated in early 2022.
SA Premium
HST is trading at an attractive valuation – with a price-to-FFO of 8.7x – representing a 35% discount to the sector’s 13.4x. HST provides investors with a great opportunity to play the high-end travel boom, backed by premium asset positioning, improving momentum, and a high-quality dividend – all at an attractive price.
Quant Sector Ranking: (as of 9/25/25): 7 out of 176
Quant Industry Ranking: (as of 9/25/25): 1 out of 17
Sector: Real Estate
Industry: Health Care REITs
An aging population and surging demand for senior housing have created powerful tailwinds for National Health Investors, Inc. (NHI), SA Quant’s top-rated Health Care REIT. With senior housing representing two-thirds of NOI, National Health Investors is positioned to benefit from long-term demographic trends. The 85+ population growth rate is expected to accelerate to a CAGR of 1.9% by 2030 and 3.5% in the following decade. On the supply side, inventory growth has dropped below 1% while new starts in Q2 2025 were the lowest level ever recorded – and 64% below the historical average.
Boosted by these dynamics, NHI delivered better than expected Q2 results, with NOI surging nearly 30% to $3.8M, primarily due to increased revenue from higher occupancy levels and revenue per occupied room. Excellent year-over-year growth in its Senior Housing Operating Portfolio, or SHOP, and continued collections on deferral repayments also drove outperformance. Looking ahead, NHI said it has $750M in liquidity and capital resources to continue executing on a $350M pipeline – which is nearly entirely focused on senior housing.
NHI offers a safe and consistent dividend, yielding 4.63%, with 33 consecutive annual payouts. Growth has lagged, but NHI increased its dividend for the first time in four years – a payout of $0.92 per share will be distributed in Q3. NHI is trading at a premium to the sector with a P/FFO of 16.50x – but positive tailwinds, a safe dividend, and stellar margins, still make it a Strong Buy stock.
Quant Sector Ranking: (as of 9/25/25): 8 out of 176
Quant Industry Ranking: (as of 9/25/25): 2 out of 15
Sector: Real Estate
Industry: Hotel & Resort REITs
XHR has crushed the real estate sector in the past three months, up more than 15%, boosted by quality financial results across its 30-hotel portfolio and three demand segments, which include Group (~35% of revenue), Corporate Transient (~40%), and Leisure Transient (25%). XHR’s Q2 revenue of $287.58M (+5.4% YoY), beat expectations by $14.23M, and adjusted FFO per share rose 9.6%, resulting from strong group business demand, a recovery in corporate transient, and normalization in leisure.
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Xenia’s Q2 performance was driven by sturdy revenue from the recently renovated Grand Hyatt Scottsdale Resort, substantial food and beverage sales portfolio-wide, and outsized gains in its highly-profitable catering business. XHR has delivered amazing FFO growth in the past three years, up by a CAGR of 78% to outperform the sector. And XHR’s outlook is impressive, with Wall Street analysts projecting earnings to grow by 9% in FY25.
Strong reinvestment and FFO dividend coverage ratios, are driving a solid profitably grade. Trading at 8.3x FFO, XHR is at a significant discount to the sector for a ‘B’ Valuation Grade. XHR offers a safe dividend, yielding 3.89%, that has delivered long-term growth. With an attractive price, outstanding growth, and accelerating momentum, XHR is another Strong Buy hotel REIT for your portfolio.
Quant Sector Ranking: (as of 9/25/25): 10 out of 176
Quant Industry Ranking: (as of 9/25/25): 1 out of 13
Sector: Real Estate
Industry: Industrial REITS
#1 among quant-rated Industrial REITs, STAG boasts 600 properties in 41 states – totaling 118.3M square feet – and has seen positive momentum after it beat earnings for the eighth straight quarter in Q2. STAG has delivered substantial growth and profitability in the past year as conditions improve in the medium-sized warehouse market.
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STAG has already leased 90.8% of the square feet it expected to lease in 2025, while achieving cash leasing spreads of 24.5% in the second quarter. STAG has seen a recovery in demand and tightening supply as trade tensions dissipate and businesses look to diversify supply chains, which CEO William Cooker elaborated on in the earnings call:
In the first quarter, news related to the global trade war drove significant market volatility. Broadly speaking, today, the theme has shifted to a general desensitization to tariff headlines. We are witnessing businesses continue to grow and make corporate decisions in an uncertain environment, a change to the broad pause seen in the past 12 months. While it’s certainly not business as usual, users cannot delay space decisions in perpetuity, and supply chain diversification remains a priority for many companies.”
STAG has posted steady growth in operating revenue and return on equity, showcases impressive profit margins, and offers a safe and consistent monthly dividend with a yield of 4.30%. The stock is trading in line with the market with a 13.81x P/FFO ratio, but improving earnings growth projections and strong all-around investment fundamentals offer great exposure to a recovering industrial REIT market.
Quant Sector Ranking: (as of 9/25/25): 11 out of 176
Quant Industry Ranking: (as of 9/25/25): 1 out of 12
Sector: Real Estate
Industry: Other Specialized REITs
VICI’s stock slid after Las Vegas reported a sharp drop in visitors in July, creating a potential buy-the-dip opportunity. VICI generates significant revenue from the Las Vegas strip – where it owns three iconic hotels – Caesars Palace, MGM Grand, and The Venetian. However, VICI also derives revenue from about 90 other experiential assets in the US and Canada. VICI is now trading at a 12% discount to the sector, at 11.7x FFO, which is attractive given the stock’s exceptional collective investment qualities, high earnings growth upside, and sturdy dividend yield.
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Moreover, the rate cut could benefit VICI by lowering refinancing costs, making it even more of a value play, according to SA Analyst Steven Fiorillo:
They have world-class assets that could increase in value as property values increase and rates decline. VICI could also further reduce its carrying costs by refinancing additional debt at lower rates and improving its margins as less capital flows toward interest expenses… As the year progresses, I think that shares of VICI can continue to move higher while rewarding investors with a dividend yield that exceeds risk-free assets.
VICI’s FFO margin of nearly 70% is helping fuel its A+ Profitability Grade, while year-over-year and long-term growth in AFFO and FFO are crushing the sector. VICI’s Dividend Scorecard is solid across the board – with B’s in safety, growth, yield and consistency. Showcasing a yield of 5.64%, VICI’s dividend has grown by a CAGR of 7% in the past five years. The gaming REIT has delivered six consecutive years of dividend payments and growth since going public in 2018.
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VICI is the final pick on our diverse list of Strong Buy REITs – a great stable of stocks that possess excellent underlying investment fundamentals, dividends you can depend on, and exceptional earnings growth upside relative to the real estate sector.
Conclusion: Top 5 REITs Poised For A Rate-Cut Rebound
The real estate sector stands to gain from interest rate cuts, with lower mortgage rates likely to stimulate homebuying, as lower borrowing costs stabilize commercial property value. REITs tend to perform well during interest-rate cutting cycles, and experts say institutional investors have been waiting for this type of monetary policy environment before deploying assets into real estate. SA Quant identified five commercial REITs with Strong Buy Quant Ratings across a wide range of industries, which have generated strong FFO.
The real-estate investment trust (Reit) segment of the UK equity market has been on life support for much of the past five years, and it’s easy to understand why investors have decided to give the sector such a wide berth.
Reits are a diverse bunch and in reality many were able to navigate through these challenges without too much difficulty. But investors didn’t wait around. The sector’s difficult outlook, coupled with investors’ general desire to sell anything listed in London, heaped selling pressure on the shares.
Investors have continued to avoid the sector despite a general recovery in the market, even though it’s becoming desperately clear the sector is deeply undervalued. That’s a fair statement to make as it is easier to determine the underlying value of Reits than of most other companies.
Determining what Reits are worth
Investors can either use the published net asset values, or use yield as a proxy for underlying cash flow to determine the value of Reits. A combination of both is probably the best strategy.
This is where the yield comes into play. The vast majority of the total return from real estate over multiple decades is income. The value of the property can rise and fall, but the income is always there, so understanding how much income an asset can generate and the quality of that income is key. This in turn feeds back into the valuation of any asset.
Purpose-built properties with high-quality tenants on long-term inflation-linked leases are generally going to be worth much more (and maintain their value better) than smaller properties let to small shops on short-term leases.
Two-thirds of the group’s portfolio consists of industrial assets such as Parkbury industrial estate – occupancy here is 99% and demand for the space is so high that tenants are paying up to stay. It was able to push through rent rises of between 8% and nearly 40% last year, in situations where leases were coming up for renewal.
Despite these quality income streams, the trust is trading at a deep discount to its 100p per share net asset and buyers are taking notice. Over the past few years, Picton has sold a clutch of office properties at an average premium to book value of 5% and these weren’t even the company’s best assets. Picton now finds itself in a strange position.
It has an attractive portfolio of real estate generating attractive income streams that buyers are willing to pay a premium for and its gearing is low at 24%, with debt fixed at an interest rate of 3.7%, but the market doesn’t seem interested. One group of buyers, however, is taking notice.
Private equity pricks up its ears
Equity investors might not be interested in UK Reits, but corporate and private-equity buyers are both taking advantage of the opportunity. In mid-2022, there were 73 real-estate companies listed on the London Stock Exchange, according to figures compiled by the Association of Investment Companies (AIC).
In the three years since, 17 have been lost to mergers or deals that have taken the companies private; 14 have wound up or are winding up, or have put themselves up for sale, leaving just 42 listed companies – a decline of 42%.
Some of the sector’s largest players have moved to swallow up their smaller peers. The synergies achieved from any deal are usually relatively small in comparison to the values involved. Instead, Reits are seeking scale to fend off predators and reduce their cost of capital, as well as to appeal to a larger audience of investors.
Take LondonMetric (LSE: LMP). In the past three years, it has acquired three other Reits, including LXi Reit, Urban Logistics Reit and CT Property Trust. The deals have catapulted the trust into the FTSE 100, making it one of the UK’s largest corporate owners of UK real-estate property assets.
However, questions are now growing around the trust’s exposure to Merlin Entertainments, the private-equity-backed theme park operator. Merlin’s losses are spiralling, and 10% of LondonMetric’s rent roll is tied to its theme park assets. The market is watching this situation closely.
The other major consolidation deal in the sector this year was Primary Health Properties’ £1.8 billion acquisition of Assura. PHP outbid private-equity giant KKR and, assuming the merger clears the recently announced competition investigation, the deal will create a healthcare-focused behemoth with nearly £3 billion of assets.
Between them, the two groups generated rental income of £333 million last year, close to 85% of which is underpinned by revenues from the UK and Irish governments.
Private equity failed to crash PHP’s party, but that was the exception, not the rule. At the beginning of September, Blackstone emerged victorious in a months-long battle to take over Warehouse Reit after rival bidder Tritax Big Box Reit (LSE: BBOX) withdrew its offer.
Meanwhile, KKR has been in talks with build-to-rent provider PRS Reit, although PRS has now accepted an offer from another bidder. PRS owns the largest build-to-rent single-family home portfolio in the UK, with 5,443 completed homes as of 31 March 2025. The company put itself up for sale earlier this year following a strategic review.
PRS is a case study in what’s gone wrong in the UK market. Despite reporting near-full occupancy quarter after quarter, a consistent rent-collection rate of 100% and a steady dividend yield of 4%-5%, the stock has continued to trade at a discount of 20%-40% of the group’s net asset value.
Soon after it put itself up for sale, an offer emerged from Long Harbour (a property management firm) valuing it at 115p, or £631.6 million, around its current share price at the time, but still below the NAV at the end of December of 139.6p. In mid-September, the company announced it had agreed the sale of the PRS Reit Holding Company, its operating subsidiary that holds the entirety of the Reits portfolio of property assets for Waypoint Asset Management for £633.3 million after fees.
The company has said when the deal closes it will liquidate and return assets to shareholders as fast as possible.
Year-to-date, the Reit sector has traded at an average discount to NAV of 28%, while many buyout offers have come much closer to NAV. Such deals help justify the NAVs: they show the values presented are not overinflated or unrealistic. They are, in fact, an excellent gauge of what the private market is willing to pay for these assets.
They also show the vast gulf between private- and public-market views of the sector and its underlying assets. This suggests there’s an opportunity for investors who are willing to dig into the weeds to find the assets worth paying for in the sector.
Where to find the best value
As noted above, investors need to consider both the quality of a company’s portfolio income as well as the NAV when trying to determine how much one of these businesses could be worth.
Picton (LSE: PCTN)is a good example. The firm has a quality portfolio, and it’s been able to sell selected assets into the market at or around book value, justifying the portfolio’s overall NAV. Despite this, the stock is trading at a discount of around 25% to its 100p per share NAV value.
Analysts at Panmure Liberum believe this value could rise to 115p by 2028 thanks to rent increases across the portfolio and growth in asset values. The stock also yields 5% on a forward basis. Put all of those factors together, and the stock looks cheap.
The management agrees. Following its deployment of £17.3 million to buy back about 4.4% of its shares since January 2025, Picton recently announced a further buyback of up to £12.5 million – the best use of capital given where the shares are today.
By contrast, Regional Reit (LSE: RGL) faces a more uncertain outlook. The company is trading at a near-40% discount to NAV, with an 8% dividend yield, but its portfolio of mainly regional office buildings is only 78.6% occupied.
In the first half of the company’s financial year, it managed to push through rent increases of 4% on new lettings, which is positive, but it’s around half the rate of Picton’s, illustrating the supply/demand fundamentals of these two markets. Picton has also lost four tenants this year as they’ve upgraded their office space.
Regional is also having to invest millions upgrading the quality of its assets to meet government environmental standards and has a major debt maturity deadline in August 2026. So, while the shares might look cheap, it’s arguable that the business does deserve to trade at a discount considering its lower-quality portfolio and weaker balance sheet.
British Land (LSE: BLND) is another example of a Reit best avoided. Despite being one of the largest listed Reits in the UK, the group’s approach to asset management has left a lot to be desired.
Broker Panmure Liberum pulled no punches in its report on British Land’s full-year results published in May, noting group earnings per share hadn’t risen in a decade. It added: “Holding brand-new offices at yields of about 5% on the balance sheet isn’t doing much for beating your cost of capital over the medium term”.
The broker said the company would be better off selling older assets to fund new developments in the pipeline (as yet to be funded) rather than allowing debt to creep up as it has been doing. “We think the market will be in ‘wait and see’ mode,” the note signed off. Since this damning verdict, the shares have slumped, falling 17%.
One of the more interesting Reits in the sector, which tends to fly under the radar (mainly due to its size, which at £172 million puts it below the reach of most fund managers), is AEW Reit (LSE: AEWU). This trust is focused on finding undervalued assets. It likes to buy property with robust income streams, but with the potential for improvement either via development or renegotiating the lease.
The group is “sector agnostic”, so it can make trades in different areas of the market wherever it sees value. The market clearly appreciates this strategy as, despite the trust’s small size, it trades relatively close to net asset value, in contrast to the rest of the sector.
In June, AEW acquired Freemans Leisure Park, an 8.4-acre freehold site in the centre of Leicester, for £11.2 million, with a net initial yield of 10.6%. This in itself is a great deal and the team at AEW has plans to make the asset even more productive by utilising undeveloped land to build hotels and restaurants, introducing electric-vehicle charging and pushing through rent increases at upcoming rental reviews.
The company is hoping to replicate the success of a previous asset, Central Six Retail Park, Coventry, which it acquired for £16.4 million in November 2021, and sold part of in December last year for £26 million for an internal rate of return of 16%, excluding the remaining part of the retail park that AEW is holding onto.
The management is committed to a quarterly dividend of 2p per share (a yield of around 7.6% on the current share price), and the company’s balance sheet is relatively clean, with a debt-to-gross-asset-value ratio of 25% and a low fixed cost of debt of 2.959% until May 2027.
Profits in care homes
Target Healthcare (LSE: THRL) is worth considering for its unique exposure to a segment of the UK property market that’s generally overlooked.
The company owns and manages a portfolio of purpose-built care homes across the UK. At the end of June, it owned 93 assets worth around £1 billion. The issues in the UK social-care sector have been well publicised, and the scale of the problem was laid bare in a recent Knight Frank report, “Healthcare Development Opportunities”.
The report notes that, while the UK’s population of over-65s has grown by 20.7% over the past decade, the number of care-home beds has only risen by 2.9%. Virtually all of this supply has come from just one region, the West Midlands. Strip this region out of the data, and the number of care-home beds has declined.
Target has the size and scale to capitalise on this market dislocation. The management is actively and proactively managing the portfolio to achieve the best returns. It recently sold a property for £9.6 million at an 8% premium to book value and has renegotiated several leases where a tenant failed to pay the rent on time (less than 5% of the rent roll overall). Target managed to renegotiate these leases at a higher rate.
The majority of the leases agreed by the company are on inflation-linked, upward-only annual rent reviews, with a weighted average duration of nearly 26 years. This quality portfolio does not deserve the discount the market has currently assigned to the Reit. The shares are trading at a discount to NAV of around 20% and there’s also a dividend yield of 6% on offer.
PHP (LSE: PHP) has similar attractive qualities. While some investors have expressed concern about the company’s level of borrowing after the merger with peer Assura, the commercial logic of operating a large, diverse portfolio of healthcare assets remains compelling.
Most leases are inflation-linked and the income generated from the portfolio is effectively backstopped by the government. The enlarged group will also play a key role in the growth of the NHS estate and modernising the countrywide primary-care network.
Considering the quality of the income stream, PHP’s current discount to its 2026 projected net asset value of 109p per share looks unwarranted, especially considering the 7.6% dividend yield on offer.
A £1.3 billion pipeline of new developments
Now PRS is leaving the market, Grainger (LSE: GRI)is one of the best pure-play operators for investors to gain access to the build-to-rent residential property sector, with 11,000 rental homes. The group has just completed its transition from a standard corporation into a Reit, which means, under the Reit rules, the company must distribute 90% of its rental income every year.
In exchange, management expects the company will save as much as £15 million in corporate tax in the first year. Grainger says it will reinvest any unrestricted tax savings, and earnings are expected to jump by 25% in the current year, then 50% by fiscal 2029.
Part of this will come from the tax boost, but part will also come from property developments. The firm has a £1.3 billion pipeline of 4,500 homes and these are filling up as fast as the group can build them.
In March, the group launched The Kimmeridge, its flagship 150-home development and first built-to-rent scheme in Oxford. It filled all spaces in just seven months, five months ahead of schedule. Within a week Grainger also announced it had let 50% of the 132 build-to-rent homes in less than a month at its Seraphina Apartments development in Canning Town. The take up was “well ahead of expectations”, according to the company.
Across the rest of the existing portfolio, occupancy is sitting at 98%-99% and last year the group pushed through high single-digit percentage rent increases across the portfolio, thanks to the lack of supply and increased demand for rental properties across the UK. There are few if any other markets that have the ability to push through inflation-plus rent hikes in the same way.
Despite the quality of the company’s portfolio, it’s trading at a near-40% discount to its last reported NAV of 300p per share. The City has pencilled in a dividend per share of 9p a year by 2029 as the company’s growth and Reit transition pays off, implying a yield of around 5% by the end of the decade on the current share price.
