3 Incredibly Cheap High-Yield Dividend Stocks to Buy Now

The stock market has risen sharply over the past year and has grew normally against new historical highs. And that means stocks are starting to get expensive. The S&P 500 it currently trades at around 24.5 times its earnings, which is above the sub-22.5 level it was trading at a year ago.

However, there are still some bargains to be had out there if you know where to look. For example, many real estate investment trusts (REITs) they are still incredibly cheap because the impact that higher interest rates have had on real estate valuations. As a result, most offer high yield dividends. There are three cheap REITs to buy right now WP Carey (WPC -0.20%), Real estate income (A -0.26%)and EPR properties (EPR 0.30%).

Getting back on a growth trajectory

WP Carey at present is expected to generate between $4.63 and $4.73 of adjusted funds from operations (FFO) on action this year. With the price of his shares recent under $60, the Diversified REIT it trades at about 13 times its earnings in the middle of its guidance range. This incredibly cheap valuation is why the dividend yield is nearly 6% these daysseveral times above the S&P 500’s sub-1.5% level.

Higher interest rates are just one of the factors weighing on REITs. Over the past year, it has worked to improve its portfolio by strategically exiting the office sector. It also required a large tenant to exercise its option to buy the properties it leased from the REIT. Those sales hurt WP Carey’s adjusted FFO, prompting it to reset its dividend last year.

However, WP Carey is slowly rebuilding its portfolio. It agreed to invest $641 million in several acquisitions of industrial and retail properties by the end of June. It is on track to close $1.25 billion to $1.75 billion af offers this year. These acquisitions should put the REIT back on a growth trajectory in the second half of 2024. This has already allowed WP Carey to start raising its dividend again. With much more upside, its current price and yield make it look very compelling, especially since its valuation should rise as its earnings return to a growth trajectory.

Still rising despite headwinds from above RATES

Fellow diversified REIT Realty Income expects to generate between $4.15 and $4.21 in adjusted FFO per share this year. With its shares trading at around $62, this REIT is selling for less than 15 times its earnings. This is the main reason why it currently offers a dividend yield of around 5%.

Because higher interest rates make REITs more expensive to make new investmentsit is expected to invest only $3 billion this year TO expand its portfolio, which excludes the completion of its $9.3 billion merger with Spirit Realty. That’s down from an average of more than $9 billion over the past two years.

While higher rates are currently a headwind for REITs, many expect them to it starts to fall later this year. This would allow it to acquire more properties to support its steadily growing dividend. Realty Income has given its investors a raise for 107 consecutive quarters. A higher growth rate could also boost its valuation.

Your ticket to an exciting monthly income stream

EPR Properties focuses on experiential real estate such as movie theaters, attractions, and fitness and wellness properties. The specialty REIT expects its portfolio to produce between $4.76 and $4.96 per share in adjusted FFO. With the price of his shares at present around $47 per share, it trades for less than 10 times its FFO. This incredibly cheap valuation is why it is the monthly dividend the yield is over 7%.

The REIT has struggled with headwinds from higher rates and persistent problems faced by some of its theater tenants in the wake of the pandemic. However, he put these problems in the past. For example, last year it entered into a comprehensive lease restructuring agreement with a bankrupt tenant. Now it is was able to grow its portfolio, cash flow and dividends.

EPR properties at present expects to spend $200 million to $300 million on new real estate investments this year, which it will finance with non-dividend cash flow and a strong balance sheet. It should be able to increase investment spending as interest rates fall. This should boost its earnings growth rate and ability to raise its dividend going forward.

Cheap stocks lead to these high dividends YIELDS

WP Carey, Realty Income and EPR Properties are bargains these days that pay high yield dividends. That combination of yield and low valuation could allow these REITs to produce attractive total returns in the coming years as interest rates eventually start to autumn. That makes them look like great buys right now before that catalyst takes hold.