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Two REIT stocks tipped by analyst Paul May
Stock Analysis & Ideas

Two REIT stocks tipped by analyst Paul May

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These two REITs from Barclays analyst Paul May’s list could provide your portfolio with higher capital growth and dividend income.

Barclays analyst Paul May has solid experience in covering real estate companies in the UK, and Europe – and two of his picks could be good choices for your portfolio.

Along with providing investment recommendations, he also develops financial models to forecast the financial numbers for the companies.

Today, we picked two real estate investment trusts (REIT), Land Securities Group (GB:LAND) and Segro (GB:SGRO) from his recommendations that have good upside potential.

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We used the TipRanks’ Expert Center which lists various analysts and their recommended picks which can guide the investors in making informed decisions.

May is a director and co-heads the real estate equity research team at Barclays. Prior to joining Barclays in 2018, he worked with Thames River Capital, covering UK-listed real estate companies.

As per the TipRanks star rating system, May is a four-star rated analyst with a success rate of 55%. He is ranked 1,239 out of 7,963 analysts and 2,405 out of 22,261 total experts.

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He has an average return of 5.7% per transaction. But his best rating so far was Hammerson plc REIT (GB:HMSO) which generated a return of almost 100%.

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Let’s see the two stocks in detail.

Land Securities Group

Land Securities Group is a leading property development group focused on commercial spaces. It is also a real estate investment trust (REIT).

The main highlight for the company is its attractive dividend policy with a yield of 7.2%. As REITs distribute the majority of their profits to their shareholders, Land Securities Group is no different.

In its annual results for 2022, the company announced a final dividend of 13p, taking the total dividend to 37p. This is 37% higher than the last year’s dividends.

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The company has a diverse portfolio of properties spread across Central London, urban neighbourhoods, and major retail destinations. This diversity helps the company navigate through the current economic challenges faced by the real estate sector.

The share price is trading down by 35% this year, which makes it more sensible to make an entry.

Is Land Securities a good buy?

According to TipRanks’ analyst consensus, Land Securities stock has a Hold rating.

The average target price is 679.2p, with a high forecast of 850p and a low forecast of 500p. The price target implies an upside potential of 35%.

May has a target price of 780p, on the stock which shows an increase of 53% on the current level.

Segro Plc

Segro is a REIT and also a property developer, managing industrial spaces and warehouses in the UK and Continental Europe.

The company’s half-yearly results for 2022 show continued demand resulting in strong business growth.

Segro’s pre-tax profit increased by 29% to £216 million, driven by higher rents due to demand and supply imbalances. The company generated £55 million of new headline rent commitments during the first half, showing strong occupier demand.

Looking ahead, the company has a development pipeline of projects in the advance stage of pre-let discussions which could lead to £118 million of rent.

Peeking into the dividends, Segro increased its interim dividends by 9% to 8.1p per share, which is one-third of its total dividend.

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Segro share price forecast

According to TipRanks’ analyst consensus, Segro stock has a Strong Buy rating.

The SGRO price target is 1,189.7p, which is 67% higher than the current price level. The price target has a high forecast of 1,400p and a low forecast of 985p.

Conclusion

Both the companies recommended by May have a stronghold in the market which will help them overcome short-term headwinds.

May has a Buy rating on both these stocks.

Disclosure

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