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Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenuThe real estate sector is taking its lumps as Treasury yields surge, but Mizuho sees plenty of potential for two dividend-paying stocks in that corner of the market. The yield on the 10-year Treasury jumped to 5.23% on Friday — a level not seen since 2007 — climbing as fears over stubborn inflation, the nation’s growing debt and elevated oil prices continue to plague the market. US10Y 5D mountain U.S. 10-year Treasury in the past five trading days For income investors, higher risk-free yields make dividend-paying stocks less attractive, so those names tend to get beat up when Treasury yields spike. In September alone, the utilities sector is off more than 6%, while real estate is down 5%. But the picture is about to improve for a pair of stocks that focus on single-family rentals, according to Mizuho analyst Haendel St. Juste. This week, the firm upgraded American Homes 4 Rent and Invitation Homes to outperform from neutral. “As we look ahead to 2027, we see an improved fundamental, regulatory and growth set-up that positions [single-family rentals] ahead of other Residential [real estate investment trust] subsector from a growth and risk-adjusted profile,” the analyst wrote. High mortgage rates, a sizable rent-vs.-own gap, as well as a greater proportion of families and dual-income households versus apartments ought to support retention and renewal rates, the firm said. There is also a “unique and sizable” opportunity for single-family residential REITs to snap up smaller players following this summer’s passage of the 21st Century ROAD to Housing Act , St. Juste added. The measure aims to encourage construction and convert vacant commercial buildings into housing. American Homes 4 Rent Shares of the single-family focused REIT are off more than 4% this year, and the stock offers a current dividend yield of 4.2%. Mizuho likes where the company stands in terms of its occupancy. “AMH’s August-ending occupancy sits well-above year-end levels last year (95.9% vs 95.0%) with the vast majority of FY26 leasing complete, suggesting a better starting point into 2027,” St. Juste wrote. The company also hasn’t been shy about buybacks, repurchasing $123 million of its own shares in the second quarter. Mizuho’s price target of $36 suggests about 17% upside from Thursday’s close. The stock is also well-liked on Wall Street, with 14 out of 25 analysts rating it a buy or strong buy, according to LSEG. Consensus price targets suggest 21% upside. Invitation Homes Invitation Homes is down nearly 5% in 2026, and the current dividend yield comes in at 4.5%. Like, American Homes 4 Rent, the company is well on its way to a strong starting point in 2027: At the end of August, its occupancy rate came in at 96.3% versus the 95.9% level at the end of last year, the firm found. Invitation Homes has also made $700 million in buybacks year to date, Mizuho said. The firm’s price target of $32 suggests more than 20% upside from Thursday’s close. Consensus price targets call for about 25% upside, per LSEG. However, 12 out of 25 analysts deem the stock a buy or strong buy, while the remaining 13 deem it a hold, LSEG found.Read More