The stock market recently hit another all-time high. The S&P 500 is up more than 30% over the past year, driven by a strong economy and falling interest rates. As a result, the valuations of most stocks have soared. The S&P 500 currently trades at more than 24 times earnings, which is much higher than the roughly 20 times P/E ratio it had at this time last year.

However, while the broader market is getting more expensive, there are some bargains if you know where to look. Several real estate investment trusts (REITs) are incredibly cheap right now because they haven't yet captured the full benefits of falling interest rates. Realty Income (NYSE: O), W. P. Carey (NYSE: WPC), and EPR Properties (NYSE: EPR) stand out for their attractive values and high dividend yields right now.

This high-quality dividend stock is on sale

Realty Income is a diversified REIT that owns stable retail, industrial, and gaming properties net leased to high-quality tenants under long-term agreements. Those leases provide it with very stable rental income because the tenants cover all operating costs, including routine maintenance, building insurance, and real estate taxes. That gives it a lot of visibility into its earnings.

The REIT currently expects to generate between $4.15 and $4.21 per share of adjusted funds from operations (FFO) this year. With its share price recently over $60 apiece, Realty Income trades at about 15 times its adjusted FFO. That incredibly cheap valuation is why the REIT offers a high dividend yield. At more than 5%, it's several times higher than the S&P 500's sub-1.5% dividend yield.

Realty Income has done a fantastic job increasing its dividend over the years. It has raised its payout for 108 straight quarters and every year for three decades. The REIT routinely invests billions of dollars each year into buying new income-producing net lease real estate. Those investments should grow its adjusted FFO, enabling the company to steadily increase its dividend.

Building back better

W. P. Carey is also a diversified REIT. It owns industrial, retail, and other properties (including a portfolio of operated self-storage locations). It focuses on owning operationally critical commercial real estate net leased to high-quality tenants.

The REIT has been reshuffling its portfolio quite a bit over the past year. It made the strategic decision to exit the office sector late last year. Meanwhile, a large self-storage tenant exercised its option to purchase the properties it leased from the REIT. Those sales have weighed on the REIT's dividend, FFO, and valuation.

W. P. Carey expects to generate between $4.63 and $4.73 of adjusted FFO per share this year. With its stock price currently right around $60 a share, the REIT trades at less than 13 times its FFO. That incredibly cheap valuation is why it currently has a dividend yield approaching 6%. The company has already started rebuilding its portfolio and dividend, which should continue in the future.

A cheap ticket to lots of dividend income

EPR Properties is a REIT that owns experiential real estate like movie theaters, attractions, and entertainment venues. It leases those properties back to operating companies under long-term net lease agreements.

The REIT expects its experiential real estate portfolio to produce $4.76 to $4.96 of FFO as adjusted this year. With its share price below $50, the REIT trades at about 10 times its FFO. That ridiculously cheap level is why it offers a dividend yield above 7%.

EPR Properties generates enough income to cover its high-yielding dividend with ample room to spare. That gives it the financial flexibility to invest in building and buying more experiential properties. It plans to spend $200 million to $300 million this year. Those investments will help grow its FFO, which should enable the REIT to continue increasing its dividend.

Dirt cheap dividend stocks

Higher interest rates have weighed on REIT valuations over the past few years. While rates have started to fall, many REITs still trade at bargain-basement prices.

Realty Income, W. P. Carey, and EPR Properties are among the cheaper REITs, which is why they have such attractive dividend yields. Those high yields, along with their low valuations and improving growth prospects, position these dividend stocks to deliver strong total returns in the coming years, making them look like great buys right now.

Don’t miss this second chance at a potentially lucrative opportunity

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*Stock Advisor returns as of October 7, 2024

Matt DiLallo has positions in EPR Properties, Realty Income, and W.P. Carey. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends EPR Properties. The Motley Fool has a disclosure policy.

3 Incredibly Cheap Dividend Stocks to Buy Now was originally published by The Motley Fool