In a low-interest rate environment where investors are looking for some extra income in high dividend stocks, REITs are always one place to look. REITs are required to pay out 90% of their earnings in the form of dividends to shareholders. That being said, it is always alarming to see institutions selling those dividend champions.
We ran a screen on REIT stocks with dividend yields above 3%. We then screened for those names with bearish sentiment from institutional investors (such as hedge funds) with significant net institutional selling over the previous quarter. This indicates they expect these names to underperform in the near future, and even their handsome yields aren't worth sticking around for.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the 4 stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
Tool provided by Kapitall.
Do you think institutional investors are right about these REITs being risky? Use this list as a starting point for your own analysis. REITs are a complicated sector to analyze, and we encourage investors to perform detailed analysis before making any investment decisions within the sector.
1. Excel Trust, Inc. (NYSE:EXL): Engages in financing, developing, leasing, owning and managing community and power centers, grocery anchored neighborhood centers and freestanding retail properties. Market cap at $498.12M, most recent closing price at $11.48. Dividend yield at 5.66%. Net institutional sales in the current quarter at -2.3M shares, which represents about 7.71% of the company's float of 29.85M shares.
2. Vornado Realty Trust (NYSE:VNO): A privately owned real estate investment trust. Market cap at $13.77B, most recent closing price at $73.96. Dividend yield at 3.73%. Net institutional sales in the current quarter at -10.8M shares, which represents about 6.39% of the company's float of 168.89M shares.
3. Sabra Health Care REIT, Inc. (NASDAQ:SBRA): Operates as a real estate investment trust in the United States. Market cap at $762.86M, most recent closing price at $20.59. Dividend yield at 6.41%. Net institutional sales in the current quarter at -2.0M shares, which represents about 5.47% of the company's float of 36.59M shares.
4. Hatteras Financial Corp (NYSE:HTS): Operates as an externally-managed mortgage real estate investment trust (REIT). Market cap at $2.41B, most recent closing price at $24.40. Dividend yield at 13.11% Net institutional sales in the current quarter at -11.7M shares, which represents about 11.93% of the company's float of 98.09M shares.
Institutional data sourced from Fidelity, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: Business relationship disclosure: Kapitall is a team of analysts. This article was written by Sabina Bhatia, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.