In this article, we will be looking at the 10 best REIT dividend stocks according to hedge funds.
In 2020, as lockdown impositions and global stay-at-home restrictions took hold, the real estate investment trust industry fell under the category of those sectors most affected by the pandemic. Vacancy rates continued to rise throughout 2020 and may keep rising in 2021. For instance, industrial vacancy rates rose from 5.3% in the first quarter of 2020 to 5.7% in the third quarter, while retail vacancy rates increased from 4.7% in the first quarter to about 5% in the third quarter, according to a 2021 outlook report for the REIT industry, published by the National Association of Real Estate Investment Trusts (NAREIT). Additionally, a Hazel View Investments outlook report mentioned that last year, global REIT share prices also declined by 42%, while global equity markets lost about $27 trillion in market cap, in the first quarter alone. As such, until the fourth quarter of 2020, the situation in the REIT industry seemed rather bleak.
However, since then things seem to have improved. NAREIT and Hazel View Investments both expect a solid recovery in the REIT industry in 2021. Just this July, REITs reported significant gains with a total return of about 25% on the FTSE Nareit All Equity REITs Index. Moreover, the second quarter of 2021 has thus far proven to be positive for the REIT industry as well. Hazel View Investments also foresees a 30% upside in share prices of REITs, with a total annualized return between 15% to 20%. Of this return, about 4% to 5% is made up of cash flow yield and robust earnings growth.
Hence, despite the overwhelming negative impact of the COVID-19 pandemic on the REIT industry, it can be expected that the industry will recover and reclaim its position in the market to become a valuable investment option. As REIT stocks and REIT dividend stocks recover in terms of share prices and returns, they become steadily more appealing, like Altria Group, Inc. (NYSE: MO), JPMorgan Chase & Co. (NYSE: JPM), Target Corporation (NYSE: TGT), and AbbVie Inc. (NYSE: ABBV).
Investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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We analyzed the data of over 866 hedge funds tracked by Insider Monkey for this article. These REIT stocks pay dividends, have mostly positive analyst ratings and are popular among the world’s most famous hedge funds. For each stock we mentioned the number of hedge funds having stakes in them.
Best REIT Dividend Stocks According to Hedge Funds
10. Essex Property Trust, Inc. (NYSE: ESS)
Number of Hedge Fund Holders: 3o
Dividend Yield: 2.8%
Essex Property Trust, Inc. (NYSE: ESS) is a fully integrated real estate investment trust working to acquire and develop multifamily residential properties on the West Coast. It is also an S&P 500 company and ranks 10th on our list of the best REIT dividend stocks according to hedge funds.
This July, Raymond James analyst Buck Horne upgraded Essex Property Trust, Inc. (NYSE: ESS) from Underperform to Market Perform, while KeyBanc raised its price target on Essex Property Trust, Inc. (NYSE: ESS) shares to $341, with an Overweight rating on the stock.
In the first quarter of 2021, Essex Property Trust, Inc. (ESS) had an FFO of $3.07, beating estimates by $0.01. The company’s revenue was $352.88 million, missing estimates by $3.33 million. Essex Property Trust, Inc. (ESS) has also gained about 31.83% in the past 6 months and 41.38% year to date.
By the end of the first quarter of 2021, 30 hedge funds out of the 866 tracked by Insider Monkey held stakes in Essex Property Trust, Inc. (ESS) worth roughly $196 million. This is compared to 25 hedge funds in the previous quarter with stakes worth approximately $309 million.
Like Altria Group, Inc. (NYSE: MO), JPMorgan Chase & Co. (NYSE: JPM), Target Corporation (NYSE: TGT), and AbbVie Inc. (NYSE: ABBV), Essex Property Trust, Inc. (ESS) is a good dividend stock to invest in.
9. UDR, Inc. (NYSE: UDR)
Number of Hedge Fund Holders: 30
Dividend Yield: 2.9%
UDR, Inc. (NYSE: UDR) is an S&P 500 company, and a leader in the multifamily real estate investment trust sector. The company has delivered superior and reliable returns through its effective management of real estate communities in targeted US markets, and it ranks 9th on our list of the best REIT dividend stocks according to hedge funds.
This July, KeyBanc raised its price target on UDR, Inc. (NYSE: UDR) shares from $55 to $46, keeping an Overweight rating on the stock. Analyst Jordan Sadler raised the price target to match his raised 2021-2022 adjusted FFO estimates for UDR, Inc. (NYSE: UDR), in light of his belief that the company’s same-store revenue and NOI will recover faster than expected.
In the first quarter of 2021, UDR, Inc. (NYSE: UDR) had an FFO of $0.47, in line with estimates. The company’s revenue was $299.83 million, missing estimates by $0.95 million. UDR, Inc. (NYSE: UDR) has also gained about 33.54% in the past 6 months and 43.04% year to date.
By the end of the first quarter of 2021, 30 hedge funds out of the 866 tracked by Insider Monkey held stakes in UDR, Inc. (NYSE: UDR) worth roughly $312 million. This is compared to 23 hedge funds in the previous quarter with stakes worth approximately $482 million.
Like Altria Group, Inc. (NYSE: MO), JPMorgan Chase & Co. (NYSE: JPM), Target Corporation (NYSE: TGT), and AbbVie Inc. (NYSE: ABBV), UDR, Inc. (NYSE: UDR) is a good dividend stock to invest in.
8. Simon Property Group, Inc. (NYSE: SPG)
Number of Hedge Fund Holders: 31
Dividend Yield: 4.3%
Simon Property Group, Inc. (NYSE: SPG) is a real estate investment trust that works with premier shopping, dining, entertainment, and mixed-use destinations. It is also an S&P 100 company and ranks 8th on our list of the best REIT dividend stocks according to hedge funds.
This July, Stifel analyst Simon Yarmak upgraded Simon Property Group, Inc. (NYSE: SPG) shares from Hold to Buy, also raising the firm’s price target from $125 to $132. Yarmak added that Simon Property Group, Inc. (NYSE: SPG) offers a potential 17.5% total return in the next 12 months.
In the first quarter of 2021, Simon Property Group, Inc. (NYSE: SPG) had an FFO of $2.48, beating estimates by $0.21. The company’s revenue was $1.24 billion, surpassing the previous quarter’s revenue of $1.13 billion. Simon Property Group, Inc. (NYSE: SPG) has also gained about 22.98% in the past 6 months and 41.52% year to date.
By the end of the first quarter of 2021, 31 hedge funds out of the 866 tracked by Insider Monkey held stakes in Simon Property Group, Inc. (NYSE: SPG) worth roughly $506 million. This is compared to 32 hedge funds in the previous quarter with stakes worth approximately $353 million.
Like Altria Group, Inc. (NYSE: MO), JPMorgan Chase & Co. (NYSE: JPM), Target Corporation (NYSE: TGT), and AbbVie Inc. (NYSE: ABBV), Simon Property Group, Inc. (NYSE: SPG) is a good dividend stock to invest in.
7. MGM Growth Properties LLC (NYSE: MGP)
Number of Hedge Fund Holders: 34
Dividend Yield: 5.6%
MGM Growth Properties LLC (NYSE: MGP) is a publicly traded real estate investment trust that acquires and leases large-scale destination entertainment and leisure resorts. It is a leader in the industry and ranks 7th on our list of the best REIT dividend stocks according to hedge funds.
This June, Wolfe Research initiated coverage of MGM Growth Properties LLC (NYSE: MGP) with a Peer Perform rating and a $43 price target. In May, Morgan Stanley raised its price target on MGM Growth Properties LLC (NYSE: MGP) shares from $34 to $38 as well.
In the first quarter of 2021, MGM Growth Properties LLC (NYSE: MGP) had an FFO of $0.67, beating estimates by $0.12. The company’s revenue was $194.34 million, missing estimates by $0.12 million. MGM Growth Properties LLC (NYSE: MGP) has also gained about 11.78% in the past 6 months and 16.95% year to date.
By the end of the first quarter of 2021, 34 hedge funds out of the 866 tracked by Insider Monkey held stakes in MGM Growth Properties LLC (NYSE: MGP) worth roughly $592 million. This is compared to 29 hedge funds in the previous quarter with stakes worth approximately $524 million.
Like Altria Group, Inc. (NYSE: MO), JPMorgan Chase & Co. (NYSE: JPM), Target Corporation (NYSE: TGT), and AbbVie Inc. (NYSE: ABBV), MGM Growth Properties LLC (NYSE: MGP) is a good dividend stock to invest in.
6. Sun Communities, Inc. (NYSE: SUI)
Number of Hedge Fund Holders: 35
Dividend Yield: 1.9%
Sun Communities, Inc. (NYSE: SUI) is a real estate investment trust owning and operating a portfolio of 432 communities made up of almost 146,000 developed sites in 32 states and Ontario. It ranks 6th on our list of the best REIT dividend stocks according to hedge funds.
This June, UBS initiated coverage of Sun Communities, Inc. (NYSE: SUI) shares with a Buy rating and a $190 price target.
In the first quarter of 2021, had an FFO of $1.26, beating estimates by $0.11. The company’s revenue was $442.01 million, up 42.45% year over year and beating estimates by $126.77 million. Sun Communities, Inc. (NYSE: SUI) has also gained about 23.72% in the past 6 months and year to date.
By the end of the first quarter of 2021, 35 hedge funds out of the 866 tracked by Insider Monkey held stakes in Sun Communities, Inc. (NYSE: SUI) worth roughly $1.007 billion. This is compared to 27 hedge funds in the previous quarter with stakes worth approximately $600 million.
Like Altria Group, Inc. (NYSE: MO), JPMorgan Chase & Co. (NYSE: JPM), Target Corporation (NYSE: TGT), and AbbVie Inc. (NYSE: ABBV), Sun Communities, Inc. (NYSE: SUI) is a good dividend stock to invest in.
5. Weyerhaeuser Company (NYSE: WY)
Number of Hedge Fund Holders: 38
Dividend Yield: 2%
Weyerhaeuser Company (NYSE: WY) is one of the largest private owners of timberlands in the world, controlling roughly 11 million acres of timberlands in the US and managing additional property under long-term licenses in Canada. The company ranks 5th on our list of the best REIT dividend stocks according to hedge funds.
This July, Goldman Sachs initiated coverage of Weyerhaeuser Company (NYSE: WY) shares with a Buy rating and a $40 price target. Analyst Susan Maklari commented that Weyerhaeuser Company (NYSE: WY) is a unique option in the timberland assets sector, and can prove to be an effective offset to deflation because of its defensive profile.
In the first quarter of 2021, had an FFO of $0.91, surpassing the previous quarter’s $048 FFO. The company’s revenue was $2.51 billion, up 45.02% year over year and also surpassing the previous quarter’s $2.06 billion revenue. Weyerhaeuser Company (NYSE: WY) has also gained about 28.56% in the past year.
By the end of the first quarter of 2021, 38 hedge funds out of the 866 tracked by Insider Monkey held stakes in Weyerhaeuser Company (NYSE: WY) worth roughly $641 million. This is compared to 40 hedge funds in the previous quarter with stakes worth approximately $614 million.
4. Prologis, Inc. (NYSE: PLD)
Number of Hedge Fund Holders: 39
Dividend Yield: 2.1%
Prologis, Inc. (NYSE: PLD) is a leading company in the logistics real estate sector, focusing on high-barrier, high-growth markets. It ranks 4th on our list of the best REIT dividend stocks according to hedge funds.
This July, in light of Prologis, Inc.’s (NYSE: PLD) positive Q2 reports, Wells Fargo analyst Blain Heck commented that the company’s shares would outperform peers. Heck has retained his Overweight rating on Prologis, Inc. (NYSE: PLD) shares.
In the second quarter of 2021, Prologis, Inc. (NYSE: PLD) had an FFO of $1.01, beating estimates by $0.02. The company’s revenue was $1.01 billion, up 7.45% year over year but missing estimates by $10.04 million. Prologis, Inc. (NYSE: PLD) has also gained about 26.35% in the past 6 months and 32.01% year to date.
By the end of the first quarter of 2021, 36 hedge funds out of the 866 tracked by Insider Monkey held stakes in Prologis, Inc. (NYSE: PLD) worth roughly $771 million. This is compared to 36 hedge funds in the previous quarter with stakes worth approximately $655 million.
Third Avenue Management, an investment management firm, mentioned Prologis, Inc. (NYSE: PLD) in its first-quarter 2020 investor letter. Here’s what they said:
“Prologis, Inc. (a U.S.-based real estate investment trust that is the largest owner of modern logistic facilities with a platform that expands more than 950 million square feet of space in 19 countries globally) completing $2.0 billion USD of debt placements at a weighted average interest rate of 0.9% with an average term of more than 13 years. In the process, the company has further solidified one of the most compelling capital structures in the real estate industry with a prudent loan-to-value ratio of approximately 25% that is primarily comprised of fixed-rate debt at an average cost of 1.8% for a term that exceeds 10 years. As a result, the long-tenured management at Prologis (including one of the true leaders in the real estate space CEO Hamid Moghadam) have set up the company for what could be a very rewarding period ahead as incremental rental income and asset management fees seem likely to accrue disproportionately to shareholders on the “bottom-line” with its interest costs locked-in.”
3. AvalonBay Communities, Inc. (NYSE: AVB)
Number of Hedge Fund Holders: 40
Dividend Yield: 3.1%
AvalonBay Communities, Inc. (NYSE: AVB) has direct or indirect ownership interests in about 291 apartment communities consisting of 86,025 apartments in 11 states and the District of Columbia. The company ranks 3rd on our list of the best REIT dividend stocks according to hedge funds.
This July, KeyBanc analyst Austin Wurschmidt raised the price target on AvalonBay Communities, Inc. (NYSE: AVB) shares from $200 to $236, keeping an Overweight rating on the stock.
In the first quarter of 2021, AvalonBay Communities, Inc. (NYSE: AVB) had an FFO of $1.95, in line with estimates. The company’s revenue was $550.26 million, beating estimates by $5.26 million. AvalonBay Communities, Inc. (NYSE: AVB) has also gained about 34.5% in the past 6 months and 43.5% year to date.
By the end of the first quarter of 2021, 40 hedge funds out of the 866 tracked by Insider Monkey held stakes in AvalonBay Communities, Inc. (NYSE: AVB) worth roughly $630 million. This is compared to 32 hedge funds in the previous quarter with stakes worth approximately $864 million.
2. Crown Castle International Corp. (REIT) (NYSE: CCI)
Number of Hedge Fund Holders: 43
Dividend Yield: 2.7%
Crown Castle International Corp. (REIT) (NYSE: CCI) owns and leases over 40,000 cell towers and roughly 80,000 route miles of fiber supporting small cells and fiber solutions in major US markets. The company ranks 2nd on our list of the best REIT dividend stocks according to hedge funds.
This July, Crown Castle International Corp.’s (REIT) (NYSE: CCI) price target was raised at KeyBanc from $207 to $224, with analyst Brandon Nispel keeping an Overweight rating on the shares.
In the first quarter of 2021, Crown Castle International Corp. (REIT) (NYSE: CCI) had an FFO of $1.20, missing estimates by $0.25. The company’s revenue was $1.49 billion, up 4.5% year over year and missing estimates by $15.14 million. Crown Castle International Corp. (REIT) (NYSE: CCI) has also gained about 27.01% in the past 6 months and 30.34% year to date.
By the end of the first quarter of 2021, 43 hedge funds out of the 866 tracked by Insider Monkey held stakes in Crown Castle International Corp. (REIT) (NYSE: CCI) worth roughly $1.99 billion. This is compared to 40 hedge funds in the previous quarter with stakes worth approximately $2.07 billion.
1. American Tower Corporation (REIT) (NYSE: AMT)
Number of Hedge Fund Holders: 58
Dividend Yield: 1.9%
American Tower Corporation (REIT) (NYSE: AMT) is one of the world’s largest REITs and a leading independent owner and developer of multitenant communications real estate. The company ranks 1st on our list of the best REIT dividend stocks according to hedge funds.
KeyBanc analyst Brandon Nispel raised the price target on American Tower Corporation (REIT) (NYSE: AMT) shares from $285 to $302 this July, keeping an Overweight rating on the stock.
In the first quarter of 2021, American Tower Corporation (REIT) (NYSE: AMT) had an FFO of $2.48, beating estimates by $0.18. The company’s revenue was $2.16 billion, up 8.3% year over year and beating estimates by $2.92 million. American Tower Corporation (REIT) (NYSE: AMT) has also gained about 26.08% in the past 6 months and 27.91% year to date.
By the end of the first quarter of 2021, 58 hedge funds out of the 866 tracked by Insider Monkey held stakes in American Tower Corporation (REIT) (NYSE: AMT) worth roughly $4.59 billion. This is compared to 61 hedge funds in the previous quarter with stakes worth approximately $4.72 billion.
Richie Capital Group LLC, an equity-focused investment management firm, mentioned American Tower Corporation (REIT) (NYSE: AMT) in its fourth-quarter 2020 investor letter. Here’s what they said:
“American Tower (AMT – Down 9.15%) – The largest operator of wireless towers has faced challenges in the form of customer churn at one of their largest customers: Sprint/T-Mobile. However, the company remains well positioned as carriers domestically and internationally transition to 5G which will require a densification of their networks.”
You can also take a peek at 10 Best Real Estate Stocks To Buy Now and 10 Best American Dividend Stocks to Invest In.
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Disclosure: None. 10 Best REIT Dividend Stocks According to Hedge Funds is originally published on Insider Monkey.
