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Quarter-End Insights

Our Outlook for Real Estate Stocks

In their search for a sustainable yield, investors have bid up real estate stocks.

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  • Real estate stocks are trading at a slight premium to fair value.  
  • Equity REIT dividend fundamentals remain healthy, and we think dividend growth exceeding inflation is possible in the near to medium term. 
  • There remain significant upside and downside drivers to near-term real estate stock pricing sectorwide, which have little to do with organic cash-generating ability.  

Lured by sustainable cash yields and a slowly improving U.S. economic picture, investors bid up real estate stocks across industries, giving brief pause when eurozone concerns came to a head. As capital market stability returned toward the end of the quarter, it appears that real estate stocks, in aggregate will likely finish at a slight premium, in aggregate, to our estimate of fair value.  

Jason Ren does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.