Issue #8

3 REITs With High Yields and Strong 2026 Growth Potential

Hey Traders,

As 2025 draws to a close, smart investors are rethinking how to position for the year ahead. With interest rates, inflation trends, and economic uncertainty all shaping the market outlook, REITs (Real Estate Investment Trusts) remain a proven way to generate steady income while keeping exposure to long-term growth themes.

In this edition, we highlight three REITs worth holding into 2026:

• Hannon Armstrong (HASI): Driving ESG-aligned growth through sustainable infrastructure.
• Broadstone Net Lease (BNL): Offering predictable income through long-term net leases.
• Apple Hospitality (APLE): A hospitality REIT with strong brand partners and a rebound story tied to travel demand.

Each of these REITs offers a unique mix of yield, stability, and upside potential—helping investors lock in consistent cash flow now while preparing portfolios for the opportunities and challenges of 2026.

Hannon Armstrong Sustainable Infrastructure Capital (NYSE:HASI)

Hannon Armstrong Sustainable Infrastructure Capital (HASI) is a leading investor in climate-positive solutions. As a REIT (Real Estate Investment Trust), the company focuses on providing capital to the renewable energy, energy efficiency, and other sustainable infrastructure markets.

Business Model and Revenue Streams

HASI's business model is centered on providing debt and equity financing to a diverse portfolio of climate-focused projects. HASI invests in and manages real assets that generate long-term contracted cash flows. Its revenue streams are primarily derived from:

• Interest and Rental Income: This is the core revenue stream from its portfolio of loans and leased assets, which includes solar and wind projects and sustainable transportation..
• Gain on Sale and Securitization: The company monetizes a portion of its assets by bundling them into securitization deals, generating one-time gains and fees.
• Asset Management Fees: HASI earns fees for managing portfolios of sustainable infrastructure assets for other institutional investors.

Recent Performance and Corporate Developments

Hannon Armstrong reported mixed results for the second quarter of 2025, with a strong increase in managed assets despite an earnings miss.

Q2 2025 Financial Highlights: 💰

• Earnings Per Share (EPS): Reported an adjusted EPS of $0.60, missing the analyst forecast of $0.64.
• Revenue: Came in at $85.69 million, below the anticipated $91.08 million.
• Recurring Net Investment Income: Grew by 25% year-over-year, indicating a healthy increase in its core, recurring revenue from its portfolio.
• Managed Assets & Pipeline: Managed assets saw a significant year-over-year increase, reaching $14.6 billion. The investment pipeline also grew to more than $6 billion, signaling a robust backlog of future opportunities.

Strategic Initiatives and Mergers: 🤝

Recent developments include:

• A ratings upgrade from S&P Global Ratings, its third investment-grade rating, which lowers its cost of borrowing.
• The issuance of $1 billion in green senior unsecured notes at a blended effective yield of 6.3%.
• The appointment of a new Chief Operating Officer, Nitya Gopalakrishnan, to enhance its operational capabilities.

Path to Profitability and Fair Value

HASI is a consistently profitable company. Based on its latest reports and analyst data, the stock appears to be fairly valued to slightly undervalued. The company’s P/E ratio is around 21.64, which is in line with or below many of its high-growth peers. The robust, and growing, pipeline of over $6 billion in potential projects also provides a clear path to future revenue and earnings growth, supporting its valuation.

Analyst Estimates and Ratings

The analyst community maintains a positive outlook on Hannon Armstrong.

• Consensus Rating: The consensus analyst rating is a "Strong Buy." This is based on a high number of Buy ratings and no Sell ratings.
• Price Target: The average 12-month price target is approximately $40.33, with a low of $28.00 and a high of $48.00.

Investor-Focused Takeaway: Is HASI Right for Your Portfolio?

Hannon Armstrong offers a unique opportunity for investors seeking exposure to the growing sustainable infrastructure market. The company’s dual revenue model provides both stable, recurring income from its portfolio. While the recent earnings miss was a slight concern, the growth in its managed assets and investment pipeline signals strong long-term momentum. The company has also demonstrated a strategic approach to managing its debt in a high-interest-rate environment, which is crucial for its business model.

What to Watch in the Near Term: 📈

• Interest Rate Environment: Monitor central bank policy, as a continued high-interest-rate environment could impact its cost of capital.
• Portfolio Yields: Keep an eye on the yields on new investments. The company has been successful in deploying capital into projects with yields over 10%, which is a key driver of future earnings.
• Execution of Pipeline: Watch for announcements on new project funding to see if the company can convert its large pipeline into funded assets.

Recommendation:

With a "Strong Buy" consensus from analysts and a compelling long-term thesis in the sustainable infrastructure space, HASI appears to be a strong candidate for a long-term hold in an income-oriented portfolio. However, investors should be aware of the risks associated with the cost of capital and the cyclical nature of the financial markets. A rising interest rate can increase its own cost of capital. However, the company has a strategy to mitigate this risk. In its recent quarterly report, the company noted that a high percentage of its debt is either fixed-rate or hedged, which helps protect against rate increases.

Broadstone Net Lease (NYSE:BNL)

Broadstone Net Lease (BNL) is a real estate investment trust (REIT) that specializes in owning and managing a diversified portfolio of single-tenant commercial properties. The company operates as a net lease REIT, which means tenants are responsible for the majority of the property's operating expenses, including taxes, insurance, and maintenance.

Business Model and Revenue Streams

BNL's business model is built on the predictable cash flows generated from its long-term, triple-net (NNN) leases. The company's revenue streams come from:

• Rental Income: This is the primary source of revenue, derived from its portfolio of properties across various sectors, including industrial, healthcare, retail, and office.
• Contractual Rent Escalations: Many of BNL's leases include built-in, annual rent escalations, which provide a predictable source of growth and help to offset inflation.
• Build-to-Suit Developments: The company’s build-to-suit projects, on a client’s demand, securing a long-term lease before construction is complete.

Recent Performance and Corporate Developments

Broadstone Net Lease reported a mixed second quarter for 2025:

Q2 2025 Financial Highlights: 💰

• Revenue: Reported $112.99 million in revenue, surpassing the Zacks Consensus Estimate.
• FFO & AFFO: The company reported Funds From Operations (FFO) of 0.38 per share, beating the consensus estimate. Adjusted Funds From Operations (AFFO) increased by 5.6% year-over-year to 0.38 per share.
• GAAP EPS: GAAP diluted earnings per share came in at 0.10, a significant miss compared to the previous year.
• Portfolio Health: The portfolio remains robust, with a 99.1% occupancy rate and a weighted average lease term of 9.7 years.

Strategic Initiatives and Mergers: 🤝

• Portfolio Simplification: The company is strategically exiting clinical healthcare assets to reduce risk, which now represent just % of the portfolio's annual base rent.
• Build-to-Suit Expansion: BNL has expanded its development pipeline with over a million in new projects, including partnerships with corporations like AGCO and Sprouts Farmers Market.
• Debt Optimization: The company closed a $1.5 billion credit facility, extending its debt maturity profile and fortifying its balance sheet.

Path to Profitability and Fair Value

Broadstone Net Lease is a profitable company with a clear path to continued growth driven by its predictable rental income, contractual rent escalations, and strategic build-to-suit development pipeline. The company's valuation should be primarily assessed using AFFO as it is a better measure of a REIT's operating performance. The stock's valuation appears fair, with a P/E ratio of approximately 28.9 and a strong dividend yield.

Analyst Estimates and Ratings

The analyst community generally holds a positive view on BNL.

• Consensus Rating: The consensus analyst rating is "Buy." This is based on a mix of "Strong Buy," "Buy," and "Hold" recommendations.
• Price Target: The average 12-month price target is approximately $19.25, with a high of $21 and a low of $16.

Investor-Focused Takeaway: Is BNL Right for Your Portfolio?

Broadstone Net Lease is a solid investment for long-term security. Its triple-net lease model minimizes operational risk and provides predictable cash flows. While its strategic diversification across industries and geographies offers a built-in defense against economic downturns. The company's recent actions, including its portfolio simplification and credit facility extension, demonstrate a disciplined approach to managing its balance sheet and driving sustainable growth.

What to Watch in the Near Term: 📈

• Acquisition Activity: Monitor the company's investment pace and the yields it achieves on new acquisitions and Build-to-suit development pipeline.
• Economic Conditions: While BNL is resilient, a significant downturn could impact tenant creditworthiness, which is a core component of its business model.

Recommendation: With a "Buy" consensus from analysts and a sound business model built on stability and growth, BNL appears to be a compelling long-term hold for an income-focused portfolio. BNL's business model is well-suited for a high-interest-rate environment. However, a prolonged high-rate environment can increase the cost of capital for future acquisitions. The company's diverse portfolio and high rent collection rate (around % in Q2 2025) provide a defensive hedge against broader economic distress. The built-in rent escalators also provide a measure of protection against inflation.

Apple Hospitality REIT (NYSE:APLE)

Apple Hospitality REIT (APLE) is a real estate investment trust that owns one of the largest and most diverse portfolios of upscale, rooms-focused hotels in the United States. Its portfolio consists of over 220 hotels operating under leading brands such as Marriott, Hilton, and Hyatt.

Business Model and Revenue Streams

APLE's business model is centered on generating stable, long-term returns through the ownership of hotel properties. Its revenue streams primarily come from:

• Room Revenue: This constitutes the majority of the company's income, generated from guest room bookings.
• Ancillary Services: Additional revenue comes from food and beverage sales and other services like meeting spaces and parking.

On the other hand, APLE's performance is highly sensitive to a high-inflation, high-interest-rate environment, the company faces challenges such as increased operating costs and less travelling.

Recent Performance and Corporate Developments

Apple Hospitality REIT reported a mixed second quarter for 2025, with revenue surpassing expectations but earnings per share missing the mark.

Q2 2025 Financial Highlights: 💰

• Revenue: Reported million in revenue, a 0.73% positive surprise over expectations.
• Earnings: GAAP diluted earnings per share was 0.27, slightly below the forecasted 0.28. Modified FFO (MFFO) was 0.47 per share, down 6% year-over-year.
• RevPAR & Occupancy: Comparable hotels saw a 1.7% decrease in RevPAR and a 1.6% decline in occupancy. The company noted that April was the most challenging month, with performance improving sequentially through the quarter.
• Distributions: The company continues to pay a monthly cash distribution of $0.08 per common share.

Strategic Initiatives and Mergers: 🤝

APLE is focused on optimizing its portfolio and creating shareholder value through capital allocation.

• Acquisitions & Dispositions: The company acquired Homewood Suites in Tampa for $18.8 million at an attractive cap rate. It also has one hotel under contract for sale and another under contract for purchase, demonstrating its active management of the portfolio.
• Share Buybacks: The company has been aggressively repurchasing shares, with a total of 3.4 million common shares purchased year-to-date in 2025 for approximately 43 million.

Path to Profitability and Fair Value

Apple Hospitality is a profitable and well-established company. With approximately half of its demand coming from leisure and the other from business travel, a sustained rebound in corporate travel would significantly boost its performance.

The company's valuation appears to be fair, with a P/E ratio of 14.66. Its consistent profitability, strong balance sheet, and a focus on share buybacks signal a disciplined approach to value creation.

Analyst Estimates and Ratings

The analyst community has a mixed but generally positive view on APLE.

• Consensus Rating: The consensus analyst rating is "Buy."
• Price Target: The average 12-month price target is approximately $17.75.

Investor-Focused Takeaway: Is APLE Right for Your Portfolio?

Apple Hospitality REIT is a solid investment with its well-diversified portfolio and strong brand partnerships providing resilience in a cyclical industry. While recent headwinds have impacted key performance metrics like RevPAR and occupancy, management's strategic focus on portfolio optimization and share buybacks positions the company for long-term growth.

What to Watch in the Near Term: 📈

• Travel Trends: Monitor trends in both leisure and business travel, as a rebound in business travel is crucial for APLE's performance.
• Economic Conditions: Keep an eye on inflation and interest rates, which can impact operating costs and future acquisition opportunities.
• Operational Metrics: Watch for improvements in key metrics like RevPAR and occupancy in upcoming quarters.

Recommendation:

With a "Buy" consensus from analysts and an attractive monthly dividend yield, APLE is an interesting option for investors who are bullish on the recovery of the travel and hospitality sectors. Talking about the Risks, APLE's performance is highly sensitive to a high-inflation, high-interest-rate environment. The company faces challenges such as increased operating costs and reduced travel demand. However, the company's diverse portfolio and strategic partnerships with well-known brands also provide a defensive hedge against market-specific risks.

A Final Word on Your Investment Decision

Hannon Armstrong (HASI), Broadstone Net Lease (BNL), and Apple Hospitality REIT (APLE) offer investors differentiated opportunities within the REIT space. With varying risk-return profiles and sensitivity to macroeconomic trends, these REITs provide a diverse set of tools for building an income-generating, long-term portfolio.

• Hannon Armstrong (HASI) – Climate-focused REIT with long-term growth tailwinds

✔ Strong recurring income through climate-positive investments
✔ Robust $6B+ project pipeline and rising managed assets
✔ Favorable analyst outlook and cost-of-capital strategy via fixed-rate/hedged debt
➤ Best for: Growth-oriented income investors looking for ESG-aligned, inflation-hedged returns in the clean energy space

• Broadstone Net Lease (BNL) – Stable cash flow and low-risk net lease model

✔ 99%+ occupancy and long-term, inflation-protected lease structure
✔ AFFO growth and strategic simplification of riskier assets
✔ Defensive positioning in a high-rate environment with predictable income
➤ Best for: Conservative investors prioritizing steady income, low volatility, and real estate diversification

• Apple Hospitality REIT (APLE) – Hospitality REIT with brand strength and upside from travel rebound

✔ Monthly dividends and strong partnerships with Marriott, Hilton, Hyatt
✔ Active capital allocation via buybacks and selective acquisitions/dispositions
✔ Mixed results but well-positioned for business travel recovery
➤ Best for: Moderately risk-tolerant investors bullish on travel recovery and seeking monthly income

Investor Insight:

• Low-risk, stable income with inflation protection? → Broadstone Net Lease (BNL)
• Climate-positive growth and ESG exposure? → Hannon Armstrong (HASI)
• Travel rebound with monthly yield upside? → Apple Hospitality REIT (APLE)

Your decision should reflect your broader financial goals, sector convictions, and tolerance for macroeconomic risk. Whether you're building for income, growth, or resilience—these REITs can serve as foundational pieces in a diversified, long-term portfolio.

We’ll be back with our next report soon, bringing you fresh insights on the market and new opportunities to watch. In the meantime, we’d love to hear from you—let us know how you found this report, what niche sectors you’d like us to cover next, and don’t forget to share your top stock holdings with us. Your feedback helps us deliver reports that matter most to your investing journey.

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Happy Trading
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