REITs are a phenomenal asset class for investors to generate passive income from property ownership without any of the headaches of being a conventional landlord. However, there are so many REITs out there that is can be difficult to find the best for investment. What makes a good REIT? The best REITs tend to have built competitive advantages by operating with expertise in a sub-sector of the real estate industry. Apple Hospitality REIT (APLE) is a prime example of this – it is a hotel REIT that specializes in leasing to the upscale Marriott and Hilton hotel brands. The company currently has a dividend yield of 6.5%, qualifying it for inclusion among the group of elite dividend stocks with 5%+ yields.
You can see the full list of 295 stocks with 5%+ dividend yields here.
Better yet, Apple Hospitality pays its dividends monthly. For investors that rely on their portfolio for current income, this monthly payout is far superior to the traditional quarterly distribution policy.
You can see the full list of monthly dividend stocks here.Â
Apple Hospitality’s high yield and monthly payout create an intriguing value proposition for income investors. This article will analyze the investment prospects of Apple Hospitality REIT in detail.
Business Overview
Apple Hospitality REIT is a real estate investment trust that focuses on owning hotels and other tourism properties. Apple Hospitality is externally-managed, which means it hires a third-party property management company to identify new tenants and secure leases. The company is relatively young as a publicly-traded security. It first began trading on the New York Stock Exchange on May 18, 2015 – two years ago. However, do not be fooled by Apple Hospitality’s short history in the public markets. The company was a private hotel owner prior to its IPO, and has a very impressive real estate portfolio.
Apple Hospitality owns 235 hotels in 87 markets across 33 states. All said, the company controls nearly 30,000 guestrooms. More details about the property portfolio of Apple Hospitality can be seen below.
Source:Â Apple Hospitality REIT Investor Presentation, slide 3
Apple Hospitality has a high degree of geographic diversification in its property portfolio. This is especially important given that the REIT operates in the hotel industry. By having a presence in a wide range of tourism markets, Apple Hospitality isolates itself from the risk that any particular geography becomes less attractive for tourists. More details about Apple Hospitality’s geographic diversification can be seen below.
Source:Â Apple Hospitality REIT Investor Presentation, slide 8
Moving on, the next section will discuss the growth prospects of Apple Hospitality REIT in detail.
Growth Prospects
Apple Hospitality’s future growth will be driven by its proven investment strategy. The REIT trend to focused on upscale hotels, and partners with the two best hotel brands in this category: Marriott and Hilton. After acquiring properties suitable for these hotel chains, Apple Hospitality hires best-in-class property operators to minimize vacancies and enhance the financial performance of its properties. More details about Apple Hospitality’s investment strategy can be seen below.
Source:Â Apple Hospitality REIT Investor Presentation, slide 6
