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Green giants: Eco-friendly REITs leading the sustainability charge

Green stocks: Eyes on this turbine giant with a strong tailwind into the future
Bogdan Stojkov

The landscape of investment is evolving fast, driven by the surge in interest in eco-friendly environmental, social, and governance (ESG) stocks, particularly among millennials and Generation Z. Companies that ignore such principles now risk significant backlash as ethical considerations become increasingly important in the business world. This reflects a broader societal shift where making money without ethical standards is no longer acceptable. Hence, in this piece, we talk about a certain eco-friendly REIT that’s spearheading this ESG transition.

ESG compliance: A game-changer in investment

ESG compliance is increasingly recognized as vital for assessing company risks, going beyond just screening out undesirable sectors. While there are critics of this approach, arguing that it may miss opportunities in sectors like fossil fuels, the trend towards ESG investing is undeniable. This trend underscores a growing commitment to integrating financial acumen with social responsibility.

Understanding REITs

Real estate investment trusts (REITs) are companies that own, operate, or finance income-generating real estate across various sectors. They allow investors to access diversified real estate portfolios without directly owning properties.

REITs are required to distribute a significant portion of their income as dividends to shareholders, making them an attractive investment option for income-seeking investors.

Host Hotels & Resorts REIT—Sustainability in real estate

Host Hotels & Resorts (NASDAQ: HST) stands out as a hospitality REIT in the luxury and upper-upscale hotel market. With a prestigious portfolio featuring brands like Grand Hyatt, Hilton, and Marriott, the company has solidified its position as a heavyweight in the hospitality industry.

What distinguishes HST is its unwavering commitment to ESG principles, which form the cornerstone of its corporate responsibility program.

HST has set ambitious sustainability goals, aiming to become net positive by 2050. Supported by a well-defined roadmap for sustainability by 2030, the company showcases a progressive approach towards environmental responsibility.

Host Hotels & Resorts Inc. is a hotel REIT with the highest market capitalization and revenue. Primarily focusing on upscale properties, HST boasts a portfolio comprising 72 properties across the United States and an additional five international properties situated in Brazil and Canada. With approximately 42,000 rooms under its ownership, alongside an interest in eight other properties, Host Hotels & Resorts Inc. stands as a prominent player in the hospitality industry.

Impressive financial performance

In addition to its ESG credentials, Host Hotels & Resorts has demonstrated impressive financial performance. Namely, over the past 14 quarters, it has exceeded its funds from operations (FFO) guidance 12 times, showcasing operational excellence.

The latest earnings call further highlighted the company’s growth prospects, with bookings for the upcoming year already showing a significant increase. Moreover, Host Hotel & Resorts REIT dividend recently went up 20 cents per share, marking an 11.1% increase from the previous dividend.

But that’s not all. With a forward yield of 2.9% and a stock trading at just 2.7 times forward sales estimates, HST presents an attractive investment opportunity.

As of the time of writing this piece, Host Hotels & Resorts stock sits at a price of $20.63, marking a modest uptick of $0.40, equivalent to a 1.98% increase year-to-date.

The bottom line

The rise of ESG investing is reshaping the investment landscape, with sustainability becoming a key consideration for investors. Companies like Host Hotels & Resorts exemplify how integrating ESG principles can lead to both environmental stewardship and financial success. And as investors increasingly prioritize sustainability, eco-friendly REITs are poised to lead the charge toward a more responsible and profitable future.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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