UBS sees ‘attractive’ opportunities in real estate. These dividend-yielding names are on its buy list

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Real estate companies are the only one of the main groups in the S&P 500 to have fallen in 2024.

The rout in the real estate market has presented an opportunity for long-term investors, according to UBS. Real estate is the only one of 11 main groups in the S & P 500 that has fallen in 2024, sliding 4.7%. Significant uncertainty remains in the commercial real estate, or CRE, market, including the path of interest rates and questions about refinancing $2 trillion in debt maturing between 2024 and 2026, UBS analyst Jonathan Woloshin wrote in a note last week.

"Although headlines are likely to remain negative and more challenges will persist in CRE, we believe patient investors with liquidity and a multi-year time horizon have a plethora of attractive risk-adjusted reward opportunities available in the CRE and REIT market." He strongly recommends focusing on quality — such as management, balance sheet, properties, geographies and dividend-to-free cash flow coverage — instead of reaching for yield.

 

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This sector is loved by Wall Street for its attractive yields and relative valueAgency mortgage backed securities are providing a coupon yield of about 5.7%, according to UBS.
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