Should You Retain Invitation Homes Stock in Your Portfolio Now?

Invitation Homes Inc. INVH is poised for growth with a diverse portfolio in infill locations in high-growth markets, an asset-light model, technological moves, process enhancements and a healthy balance sheet.However, the elevated supply of rental units in some of Invitation Homes’ markets and the high debt burden are its concerns.Last month, INVH reported first-quarter 2025 core funds from operations (FFO) per share of 48 cents, beating the Zacks Consensus Estimate of 47 cents. The reported figure compared favorably with the prior-year quarter’s 47 cents. Results reflected higher same-store NOI, with increased same-store blended rent, though lower same-store average occupancy partly marred the upside.What’s Supporting INVH Stock?Invitation Homes is poised to benefit from a high-quality portfolio of single-family rental units in infill locations in the Western United States, Sunbelt and Florida. Solid demand for such rental units in the high-growth markets with favorable demographic trends is likely to benefit the company in the upcoming quarters.INVH operates on an asset-light model by building relationships for built-to-rent units with top homebuilders like D.R. Horton, Lennar, Pulte, Meritage and many others who develop homes and deliver them to the company. It aims to drive profitability through a value-added platform and minimal capital investments.Invitation Homes is leveraging technological initiatives and process enhancements through the ProCare application for enhanced customer experience and margin expansion. Such efforts are likely to capture additional NOI, driving long-term profitability. Per the company’s March Investor Presentation, this residential REIT estimates around $80 million in value-added revenues for 2025.Invitation Homes continues to focus on its strategic priorities, such as disciplined capital distribution and maintaining an investment-grade balance sheet. As of March 31, 2025, the company had $1.36 billion of liquidity through a combination of unrestricted cash and undrawn capacity on its revolving credit facility. The company’s Net debt/TTM adjusted EBITDAre was 5.3X, and it has no debt maturing before 2027. A healthy balance sheet position enables it to procure debt financing at a favorable rate.Solid dividend payouts are arguably the biggest enticement for REIT investors, and INVH remains committed to that. The company has increased its dividend five times in the last five years, and the five-year annualized dividend growth rate is 17.59%, which is encouraging. Given Invitation Homes’ operating platform and solid financial position, its dividend seems sustainable and well-covered by cash flow from operations.What’s Hurting INVH Stock?The struggle to lure renters is likely to persist as the volume of new deliveries remains elevated in several markets where Invitation Homes operates. Particularly in markets like Texas, Florida and Phoenix and a few others with easier barriers to entry, the company is witnessing supply pressures, resulting in lower rental rates.Despite the Federal Reserve announcing rate cuts late in 2024, the interest rate is still high and is a concern for Invitation Homes. Elevated rates imply high borrowing costs for the company, affecting its ability to purchase or develop real estate. The company has a substantial debt burden, and its total debt as of March 31, 2025 was $8.18 billion.Over the past three months, shares of this Zacks Rank #3 (Hold) company have fallen 2.8%, narrower than the industry's decline of 10%.Image Source: Zacks Investment ResearchStocks to ConsiderSome better-ranked stocks from the broader REIT sector are VICI Properties VICI and W.P. Carey WPC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share has been raised marginally over the past month to $2.34.The consensus estimate for W.P. Carey’s current-year FFO per share has moved northward by 1% in the past month to $4.88.Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report W.P. Carey Inc. (WPC): Free Stock Analysis Report Invitation Home (INVH): Free Stock Analysis Report VICI Properties Inc. (VICI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks