Dividends Premium REITs: September 2025

REITs are under owned, under valued and big time inflation beneficiaries.

Editor’s Note: Welcome to your September Dividends Premium REITs. Thanks for reading!

The property business is closely focused on the Federal Reserve this week, as the central bank deliberates resuming the cuts in the Fed Funds rate it paused in late 2024. My view is the consensus expectation of at least a quarter point cut in that benchmark rate will prove on the mark, with guidance for at least one more cut this year.

But the bigger question for real estate is how Fed actions will affect already rising expectations for future inflation, and therefore borrowing costs. I offer my take in this report along with a low risk strategy for taking advantage, whichever way it goes.

Your issue this month includes the full quarterly databank of our 84 REIT Rater coverage universe. My comments column features analysis of most recent earnings and guidance updates. And I offer buy/hold/sell advice and risk ratings for each REIT. I hope you find it useful.

Have a question? Then please join my Dividends Roundtable forum on Discord. I host it 24/7 and all comments and questions are more than welcome!—RC

REITs are Undervalued, Underowned and Ready to Roll

Strong underlying businesses ultimately produce outsized investor returns. That’s key for REIT owners to keep in mind this year, as with few exceptions the sector continues to lag the S&P 500.

The average year-to-date return for my First Rate REITs is roughly 4 percent. That’s generally in line with the performance of most sector ETFs with about twice the current yield.

It’s also almost 10 percentage points less than S&P 500 ETFs, which are the core of most American’s stock portfolios. Just eight stocks, all historically expensive, comprise nearly 37 percent of the index. And since early spring, they’ve received a huge boost from growing excitement about the potential of artificial intelligence, basically at the expense of most other sectors including REITs.

Don’t count me among AI skeptics. Sure, there’s plenty of widely circulated misinformation. And the so-called discussion in social media as well as mainstream media is much more science fiction than fact.

But AI’s call on US electricity and increasingly communications spectrum is very real. So is the willingness of US Big Tech to spend whatever it takes to develop it. And they can certainly afford it, as the richest companies in the history of the world.

Equally, however, investors always bid up stocks of companies expected to dominate a boom well in advance of real earnings impact. That was the case for the companies that dominated Information Technology hype in the 1990s.

By 2000, they were fully priced for perfection and then some. And despite their continuing promise as businesses, their stocks crashed when market conditions changed, in some cases taking 10 to 15 years to fully recover. IT's demise basically ensured the ‘00s were a lost decade for the S&P 500, largely because it had become so over-weighted on those stocks during the 1990s boom.

Market history never really repeats exactly. But ultimately it does rhyme. Investors who’ve leveraged their futures to the S&P 500 in the belief they’re reducing risk are actually doing quite the opposite—making a leveraged bet on the fate of a single industry.

Underowned and Undervalued

In contrast, the underperforming REIT sector is right now collectively around 1 percent of the index—historically under owned. The most heavily weighted is senior housing company Welltower (NYSE: WELL) at just 0.19 percent. First Rate REIT American Tower (NYSE: AMT) is 0.16 percent. And the largest conventional REIT in the index—Simon Properties (NYSE: SPG)—is just 0.1 percent. Contrast that to the 7.72 percent of the S&P 500 in just one stock, NVIDIA Corp (NSDQ: NVDA).

REITs’ historic underweighting in the S&P 500 is one reason not to fear a Big Tech/S&P pullback or even a crash. Another is very low valuations.

Seniors housing has been among the hotter REIT sectors recently. And I see better values than leader Welltower, notably First Rate REIT Ventas Inc (NYSE: VTR).