4 Downgraded REITs To Reconsider Before You Buy

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 |  Includes: KIM, LTC, NLY, SNH
by: Dividend Stocks Online

When a company cuts its dividend it is usually because cash flow and income is slowing. Many REITs have fallen into this scenario in recent months. Those that are able to maintain their yields are now facing valuation concerns. Each of these stocks currently has a dividend yield of 4% or more. Downgraded stocks do not often come with a price target but we have listed the reason for the downgrade when it was available.

LTC Properties (NYSE:LTC)

Stifel Nicolaus downgraded LTC Properties from a Buy to a Hold on February 7. Stifel Nicolaus cited valuation as the reason for the downgrade but did not provide a price target. LTC has a dividend yield of 5.3% and pays monthly dividends. If its current monthly distributions continue 2012 will be the 3rd year of consecutive dividend increases. LTC is up 17.7% in the last 12 months and Stifel Nicolaus believes the stock is no longer a buy at these levels.

Annaly Capital Mgmt (NYSE:NLY)

FBR Capital downgraded NLY from Outperform to Market Perform and set a price target of $16 on February 8. FBR Capital said the downgrade was based on disappointing Q4 results and the negative impact from the flatter yield curve. NLY has a dividend yield of 14.8% but has now cut its dividend 3 quarters in a row. Current yields are based on an annual dividend of $2.44 but based on the most recent dividend we can expect yields to be lower this year.

Senior Housing (NYSE:SNH)

Stifel Nicolaus also downgraded Senior Housing from a Buy to a hold on February 7. It cited valuation as the reason for the downgrade but did not provide a new price target. The stock has risen 10% since it upgraded it on November 23, 2011. SNH has a dividend yield of 6.6% and has increased the dividend for 10 consecutive years.

Kimco Realty (NYSE:KIM)

UBS downgraded Kimco Realty from a Buy to Neutral and set a price target of $19 per share on February 10. UBS cited valuation as the reason for the downgrade. Kimco made a big cut to its dividend in 2010 but has since raised the dividend for two years. KIM has a dividend yield of 4%.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.