If you have an idea that you geniunly think its good don't let some idiots talk you out of it.
The novel coronavirus pandemic has completely upended the markets and changed the nature of investing.But what is also true is that there are several domains where market movements have surprised us.One sector, which should be going south but isn’t, is real estate. With consumer discretionary incomes taking a pounding, shouldn’t housing demand be at an all-time low? New home starts rose 1.9% to a 1.42 million annualized rate from a month earlier, that’s still not enough to guarantee prices going down soon.
We start with perhaps the safest bet in the sector. D.R.Despite being an industry leader, DHI stock is trading at 11.45 times forward price-earnings when the sector trades at 19.58 times.Any Covid-19 related headwinds should slow down the company for just a few quarters.But the long-term growth story for the company remains intact.
Although the dividend yield remains small, I appreciate a company that maintains a decent dividend payout ratio over time.Considering the remote working trends, it’s surprising that the company is holding its own.The pandemic, which has wreaked several of its healthcare REIT peers, has actually been a boon for the company.This is because its tenants are working actively to develop vaccines and new testing methods, including but not limited to Moderna (NASDAQ:MRNA), Pfizer (NYSE:PFE), Johnson & Johnson (NYSE:JNJ), andWith several tenants part of the solution rather than the problem, ARE is in a prime position to grow moving forward.The company’s focus on single-family homes is both an Achilles’ heel and a unique selling point.With office or retail REITs, you usually have institutional tenants to rely on for a steady income stream.In comparison, residential REITs have several thousand tenants, which can be hard to track and manage.That’s why operational costs are high for this kind of REIT.
As millennials enter their prime home-buying age, they are looking to purchase properties in the suburbs rather than the dense urban areas.That has a lot to do with the pandemic.As a result, it really doesn’t matter if you live in the city or outside.That provides an excellent tailwind for single-family homes that the company can serve.
Even the biggest retail names find it difficult to increase footfall in their stores, so LOW definitely deserves some brownie points here