Dirt – Earlybirds Invest https://earlybirdsinvest.com Latest Crypto News Sat, 09 Aug 2025 14:22:55 +0000 en-US hourly 1 https://wordpress.org/?v=6.9.8 https://i0.wp.com/earlybirdsinvest.com/wp-content/uploads/2024/12/cropped-New-Project-2024-12-17T235703.455.png?fit=32%2C32&ssl=1 Dirt – Earlybirds Invest https://earlybirdsinvest.com 32 32 240146708 These 2 Dirt Cheap Dividend Stocks Just Reported Fantastic Earnings — Here's Why You Should Take a Closer Look https://earlybirdsinvest.com/these-2-dirt-cheap-dividend-stocks-just-reported-fantastic-earnings-heres-why-you-should-take-a-closer-look/ https://earlybirdsinvest.com/these-2-dirt-cheap-dividend-stocks-just-reported-fantastic-earnings-heres-why-you-should-take-a-closer-look/#respond Sat, 09 Aug 2025 14:22:54 +0000 https://earlybirdsinvest.com/these-2-dirt-cheap-dividend-stocks-just-reported-fantastic-earnings-heres-why-you-should-take-a-closer-look/ Not all stocks are expensive. These look like bargains and are firing on all cylinders.

Real estate investment trusts, or REITs, aren’t exactly known for issuing surprising earnings results, but several top-notch REITs have reported stronger-than-expected occupancy, investment activity, and rent growth.

Some of the REITs that have pleasantly surprised investors also happen to be trading for relatively cheap valuations, a breath of fresh air at a time when much of the stock market is at or near all-time highs. Here are two that could be worth a closer look for long-term investors right now.

A person looking at a laptop with a surprised expression.

Image source: Getty Images.

No signs of weak consumer spending here

Tanger Factory Outlet Centers (SKT -0.99%) is the only pure-play outlet mall REIT in the market, with a portfolio of about 40 outlet properties, primarily located along coastal and tourist-heavy areas.

In the second quarter, Tanger reported stellar 9.4% year-over-year growth in funds from operations (FFO), and all of the major portfolio metrics looked strong. Tanger’s portfolio occupancy was 96.6% at the end of the second quarter, an 80-basis-point sequential increase. And if you were worried about the health of the American consumer, it isn’t apparent in Tanger’s numbers — the average tenant had $465 per square foot in sales over the past 12 months, $27 more than a year ago.

Impressively, Tanger’s spreads on new and renewal leases was 12% during the second quarter, meaning that when a tenant renews their lease or a new tenant moves in, Tanger is making 12% more than it was previously.

In all, this was a fantastic quarter and Tanger raised its full-year FFO guidance on the strength of its results. But even now, Tanger trades for about 14 times FFO and has a 3.7% dividend yield that is nicely covered by its cash flow.

A rock-solid monthly dividend stock

Realty Income (O 0.69%) has a portfolio of more than 15,000 single-tenant properties, most of which are retail in nature. But it’s a different type of retail than Tanger owns. Realty Income chooses tenants that sell non-discretionary products, are service-based, or that are deeply discount-oriented. Their tenants sign long-term lease agreements that require them to cover taxes, insurance, and maintenance — all Realty Income has to do is get a quality tenant in place and enjoy years of growing income.

Realty Income’s results were solid all around. But perhaps the biggest surprise is that Realty Income is still finding plenty of attractive ways to put money to work, despite the unfavorable interest environment. In the second quarter alone, Realty Income invested $1.2 billion in properties at an average initial yield of 7.2%, and meanwhile it issued about $1.3 billion in new debt at an average interest rate of about 3.6%.

In fact, Realty Income raised its full-year investment guidance to $5 billion (previously $4 billion) and increased its full-year FFO guidance midpoint. Shares now trade for just 13.4 times expected FFO, and Realty Income pays a 5.7% dividend yield in monthly installments.

Why they’re worth a look now

Both of these REITs are firing on all cylinders, with solid occupancy, leasing activity, and tenant performance. And both are trading for surprisingly low valuations.

One big reason is that we’re still in a relatively high interest rate environment, and this is a negative catalyst for REITs. Higher interest rates mean that it costs more to raise growth capital, and they also put pressure on commercial real estate values. But as rates (hopefully) trend lower over the next couple of years, it could produce a positive tailwind for these two excellent businesses. I own both in my portfolio (Realty Income is one of my largest investments), and both look extremely attractive from a long-term perspective right now.

Matt Frankel has positions in Realty Income and Tanger. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends Tanger. The Motley Fool has a disclosure policy.

]]> https://earlybirdsinvest.com/these-2-dirt-cheap-dividend-stocks-just-reported-fantastic-earnings-heres-why-you-should-take-a-closer-look/feed/ 0 52344 Market Correction: This Dirt Cheap ETF Is Down by Almost 20% https://earlybirdsinvest.com/market-correction-this-dirt-cheap-etf-is-down-by-almost-20/ https://earlybirdsinvest.com/market-correction-this-dirt-cheap-etf-is-down-by-almost-20/#respond Fri, 14 Mar 2025 22:40:43 +0000 https://earlybirdsinvest.com/market-correction-this-dirt-cheap-etf-is-down-by-almost-20/

The benchmark S&P 500 index recently reached correction territory, indicated by a 10% drop from its highs. But certain other parts of the stock market have been hit even harder.

One big area of underperformance in the recent market sell-off is small-cap stocks. The Russell 2000 small-cap index is down by more than 18% from its late-2024 peak, and to be fair, there are some good reasons. For example, there are increasing fears of a recession, and this often impacts smaller companies to a greater extent.

However, small-cap stocks looked like an excellent opportunity for long-term investors at the beginning of the year, and they look even more attractive right now. That’s why the Vanguard Russell 2000 ETF (VTWO 2.44%) is at the top of my buy list right now.

What is the Vanguard Russell 2000 ETF?

As the name suggests, the Vanguard Russell 2000 ETF is an index fund that tracks the Russell 2000, which is widely considered to be the best indicator of how small-cap stocks are doing.

The median market cap of a Russell 2000 company is $3.3 billion, and although this is a weighted index, no stock makes up more than 0.6% of the fund, a sharp contrast to the mega-cap-heavy S&P 500. The fund’s top holdings are Sprouts Farmers Market, Insmed, and Vaxcyte. If you aren’t too familiar with any of those, that’s kind of the point — a broad small-cap ETF like this allows you to get exposure to a wide range of smaller companies without the need to research investments.

Like other Vanguard index funds, this is a very low-cost ETF, with a 0.07% expense ratio. This means that for every $10,000 you invest, your annual investment costs are just $7. (This isn’t a fee you have to pay — it will simply be reflected in the fund’s performance over time.)

A wide valuation gap

The Vanguard Russell 2000 ETF was cheap a year ago and has only become even cheaper. At the start of 2024, small caps were trading for their lowest price-to-book valuation relative to their large-cap counterparts since the late 1990s. However, because of the artificial intelligence (AI)-fueled surge in mega-cap tech stocks last year, the gap only got wider. Even this year, with the S&P 500 in correction territory, the Russell 2000 has performed even worse.

^RUT Chart

^RUT data by YCharts

This has resulted in a wide valuation gap between small-cap and large-cap stocks. Just take a look at some of the key metrics:

Metric

S&P 500 Median

Russell 2000 Median

P/E ratio

27.5

17.8

P/B ratio

5.0

2.0

Earnings growth rate

18.9%

14.3%

Data source: Vanguard. As of 1/31/2025.

This is as of Vanguard’s latest data at the end of January. The gaps have widened even further since then in the recent correction. Also notice that while the typical S&P 500 stock is growing earnings faster, it’s not a big enough difference to justify such a wide valuation gap.

To be fair, I don’t think the gap will completely close. The S&P 500 has a disproportionate amount of high-growth (read: high-valuation) tech stocks and deserves somewhat of a premium. But this is the widest gap between the two indexes in a long time, and as I’ll discuss in the next section, small caps could catch up.

Small-cap stocks could be big winners in a rebound

For one thing, while small-cap stocks have been disproportionately hit by recession fears, tariff uncertainty, and disappointing economic data, the exact opposite could be the case once these things turn around.

It’s also worth noting that expectations for Federal Reserve interest rate cuts for this year have increased significantly over the past few weeks, with the median expectation now calling for three or four quarter-point rate cuts, up from an expectation of just one at the start of the year.

Small caps could be a big winner as rates fall. As a group, small caps are more reliant on borrowed money, and lower interest rates could certainly help. Plus, as rates fall, money should start coming out of things like Treasury securities and CDs and flowing into the market, which could be a big help for “riskier” stocks like small caps.

Finally, there’s also the prospect of things like tax cuts and regulatory reform that are part of the Trump administration’s plans. Once the dust settles on the tariff uncertainty, these could be a big boost for smaller companies.

To be perfectly clear, I have no idea if the market turbulence and correction are close to an end. If the economic data gets worse or the tariff uncertainty intensifies, just to name a few examples, things could get worse before they get better. But from a long-term perspective, the Russell 2000 ETF looks like a great opportunity right now, and I’m confident long-term investors who take advantage now will be glad they did.

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