For years, investors have been looking into dividend-friendly REITs (real estate investment trusts) to bolster their income. Unfortunately, 2020 wasn’t a great year for the real estate sector. Even with the generous dividends that REITs offered to investors. Nonetheless, the appeal for dividend-friendly REITs continues to intensify. Largely, thanks to changes in the conventional investing wisdom learned from last year’s economic meltdown.
With the world opening up again and the economy quickly recuperating from last year’s lockdown effect, here are the best UK REITS 2021 that promise to make you a lot of cash.
Investing in leasehold and freehold commercial properties in the UK, AEW has holdings in high street retail properties, offices, and industrial warehouses. Some may think that retail and offices are a dying breed. However, that’s not quite true as the state of normalcy is quickly resuming in the country. People still want to shop from physical stores and offices. This is despite the brick-and-mortar retail market losing most of its customers to the online sector.
Offices are also not the draw they once were with people working from their homes. But not every company is looking to become fully remote. Unfortunately, there’s one significant downside to this UK REIT. The full-year earnings for 2021 are expected to reduce to 16 million euros. However, they are then expected to rise to 16.8 million in 2022. That means the share price for this REIT might take a significant hit in the next few months.
Despite the expected fall in earnings in those two years, the AEW dividend yield will rise from 6.93% in 2020 to 8.53%. That’s a significant amount of cash given back to the investors. Although dividends are never a guarantee in this financial market. Additionally, the earnings per share will rise from 2.4p per share given last year to 6.19p and 7.31p in 2021 and 2022 respectively.
With a 12.5 forward price-to-earnings ratio, AEW is among the cheapest UK REITs that is worth the money. The company also won a battle on 15th June 2021 to allow them to recover 1.2 million euros in unpaid rent. Therefore, it’s worth buying today for the dividends alone.
The Custodian REIT is the second UK financial asset worth adding to your portfolio in 2021. Their numbers are stacking up nicely for some serious dividend yield soon. It has a forward P/E ratio of 15 on average, with an expected earning per share growth of 180% in 2022. Even better, the Custodian REIT promises, with a conservative net gearing of 32% that makes it lenient and not overly indebting.
Currently, the Custodian REIT has a decent yield of 3.66%, with the 2022 dividends slated at 5.69%. This is then expecting to hit 6% the following year. The REIT is expected to strongly recover its net profit from 2 million euros in 2021 to 28 million in 2022. The numbers also indicate that the investment giant Blackrock is increasing its holdings earlier in May this year. Of course, there are risks with this REIT, but the operating margins have been reducing recently. Although they might not reach their ambitious profit growth targets, so keep that in mind.