Stocks tagged as cheap often bear the scars of market skepticism. Yet, seasoned investors know the value of defying conventional wisdom by digging into overlooked opportunities. Presently, Rexford Industrial and Toronto-Dominion Bank tout marked-down prices, elevating their dividend yields to historic levels. Seize the moment. Here’s why.
Rexford’s Strategic Focus in a Lucrative Market
In the realm of warehouses, Southern California stands out as a unique industrial landscape. Notably, it boasts the largest industrial market in the U.S., and if separated, would rank as the fourth-largest globally. With a lower vacancy rate relative to other major markets, limited industrial asset construction, and increasing demand for housing conversions, Southern California emerges as a prime territory for industrial asset ownership – a focal point for Rexford Industrial.
The Real estate investment trust (REIT) recently posted robust first-quarter 2024 results, witnessing a 20.3% upsurge in funds from operations. The stock plunged despite a slight uptick in full-year guidance, propelling its yield to near decade-high rates. This presents a prime entry point for long-term investors eyeing Rexford’s growth potential.
This dip manifests a buying opportunity as Rexford forecasts growth predominantly driven by ongoing redevelopment and repositioning efforts within its existing property portfolio. Despite a modest 3.8% dividend yield, Rexford has consistently increased dividends at an impressive 15% annualized rate over the past decade, with accelerated growth in recent years. For those keen on dividend growth, Rexford emerges as an enticing prospect.
Toronto-Dominion Bank Navigates Rough Seas
As the sixth-largest bank in North America by assets and the second-largest in Canada, Toronto-Dominion Bank garners attention. Noteworthy for dividend investors is its unwavering consistency in dividend payouts, unlike peers Bank of America and Citigroup, which slashed dividends during the Great Recession. TD Bank’s history of dependability shines through its historically significant 5.1% dividend yield.
However, challenges loom large. The cooling Canadian housing market and the spike in interest rates raise concerns about a slowdown in the mortgage business. Despite these headwinds, TD Bank maintains a robust Tier 1 Capital ratio, underscoring its resilience to potential adversities ahead.
In the U.S. market, regulatory concerns forced TD Bank to abandon an acquisition, triggering a setback in its growth trajectory. While this poses a temporary hurdle, the bank’s ability to organically expand through new branch openings remains intact. Bouncing back from this obstacle seems plausible for TD Bank.
Bold Investors Recognize Value Amidst Fear
Embracing the idiom ‘buy low, sell high,’ investors wading through choppy waters in the market are likely to stumble upon stocks with transient imperfections. Both Rexford and TD Bank, presently undergoing subdued market sentiment, offer dividend seekers near decade-high yields, presenting a compelling case for consideration.
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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Reuben Gregg Brewer has positions in Toronto-Dominion Bank. The Motley Fool has positions in and recommends Bank of America and Rexford Industrial Realty. The Motley Fool has a disclosure policy.