In this article, we will look at 10 dividend-paying REIT stocks to buy now.
With the ongoing macroeconomic situation that is distressing the stock market and industries worldwide, including the real estate industry, REITs are one of the safer bets where investors can shelter from inflation and rising interest rates. While some REITs, such as mortgage REITs, are vulnerable to interest rates and macroeconomic pressures, other REITs, especially those that invest in healthcare infrastructure and retail chains, are relatively less cyclical and have defensive properties which make them a stable investment option.
According to JLL’s Capital Markets M&A and Strategic Transactions Monitor report, 2021 marked one of the best years for the REIT sector. In 2021, REIT M&A volume reached $140 billion and returned 43% for the whole year, versus the S&P 500’s returns of 14% over the same time period. Although all REIT sectors outperformed benchmarks, retail REITs and self-storage REITs gained the most and returned 88% and 78% year over year, respectively. According to experts at JLL, REITs and commercial real estate were among the least impacted by rising inflation and the FED’s rate hikes up till March 2022, and posted positive returns during the first quarter of 2022. JLL also studied Fed rate hikes and core commercial real estate yields data since 1982 and found a weak correlation between the two, concluding that REITs are not vulnerable to interest rates if they do not reach real positive levels.
According to Morgan Stanley’s 2022 report on the real estate and REIT industry, analysts at the major bank expect REITs and commercial real estate to have another strong year in 2022. In 2021, North America was the leading region that accounted for REIT growth. In 2021, in the United States, self-storage REITs gained 79.4%, industrial & logistics REITs gained 62.6%, residential REITs posted gains of 57.9%, and retail REITs posted gains of 52.1%. Morgan Stanley analysts expect REIT cash flows and dividends to grow by 10% in 2022.
On July 22, equity analysts Brenda Vingiello, Jason Snipe, Josh Brown, and Jim Lebenthal weighed in on investing in the REIT sector on CNBC’s Halftime Report. Josh Brown was asked about his view on REITs and here is what he said:
“I think it’s been a tough year for these because they are so interest rate sensitive. The type of investment that would work better in a different kind of environment, but you have to play the hand you’re dealt. So I am broadly positive on them. I think the only way to think about REITs is not tactically. You want to think about them strategically. They should have a certain percentage of every investor’s portfolio”
Brenda Vingiello was asked about American Tower Corporation (NYSE:AMT), a leading REIT that invests in data center infrastructure, which is one of her holdings. She has called it an “unconventional REIT.” Here is what the analyst said:
“We continue to think there is going to be an ongoing need and growth within this industry and we really like the defensive nature in general because this is a great source of very predictable revenue that’s coming in here, unlike some of the other REITs out there that have their futures in question, like Office-related REITs. This one, there is no question in our view that it’s gonna continue to be relevant and continue to grow, so that’s why we have chosen it out of the group.”
Amid recession risks and rising inflation, dividend stocks like Johnson & Johnson (NYSE:JNJ), Exxon Mobil Corp (NYSE:XOM) and Altria Group Inc (NYSE:MO) are gaining traction in 2022. In this article, however, our focus would be on REIT dividend stocks.
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Our Methodology
To determine the 10 best REIT stocks to buy now, we analyzed REITs from different sectors and narrowed down our picks to REIT stocks that had high dividend yields and strong free cash flows. We also gave weight to the analyst and investor sentiment around each REIT stock and preferred stocks that had positive market sentiment. To derive the hedge fund sentiment we consulted Insider Monkey’s database which, as of the first quarter of 2022, keeps track of over 900 elite hedge funds.
10 Dividend Paying REIT Stocks To Buy Now
10. Equinix, Inc. (NASDAQ:EQIX)
Number of Hedge Fund Holders: 40
Dividend Yield as of July 22: 1.90%
Equinix, Inc. (NASDAQ:EQIX) is a prominent data center REIT that owns and operates more than 220 International Business Exchange data centers that are spread across 27 countries worldwide. This May, the company announced that it has acquired four data centers in Chile from Entel, a leading telecommunication services provider. As of July 22, the stock has a forward dividend yield of 1.90% and the company has free cash flows of $136.73 million to support it.
On June 30, Jefferies analyst Jonathan Petersen upgraded Equinix, Inc. (NASDAQ:EQIX) to Buy from Hold and raised his price target on the stock to $790 from $750.
At the close of Q1 2022, 40 hedge funds were long Equinix, Inc. (NASDAQ:EQIX) and held stakes worth $1.20 billion in the company. This is compared to 45 positions in Q4 2021 with stakes of $1.41 billion. Like Johnson & Johnson (NYSE:JNJ), Exxon Mobil Corp (NYSE:XOM) and Altria Group Inc (NYSE:MO), EQIX is a popular dividend stock among hedge funds.
As of March 31, Impax Asset Management owns over 0.66 million shares of Equinix, Inc. (NASDAQ:EQIX) and is the largest shareholder in the company. The fund’s stakes were valued at $490.92 million.
9. American Tower Corporation (NYSE:AMT)
Number of Hedge Fund Holders: 50
Dividend Yield as of July 22: 2.24%
American Tower Corporation (NYSE:AMT) is a leading independent owner, operator, and developer of multitenant communications real estate and has a portfolio of more than 221,000 communications sites. As of July 22, American Tower Corporation (NYSE:AMT) has gained 4.51% over the past six months and is offering a forward dividend yield of 2.24%, which the company supports with its free cash flows of $2.95 billion.
Wall Street is bullish on American Tower Corporation (NYSE:AMT). On July 1, KeyBanc analyst Brandon Nispel trimmed his price target on American Tower Corporation (NYSE:AMT) to $283 from $286 but reiterated a buy-side Overweight rating on the shares. On July 17, Citi analyst Michael Rollins lowered his price target on American Tower Corporation (NYSE:AMT) to $290 from $300 but maintained a Buy rating on the shares.
In addition to AMT, analysts are also maintaining their strong ratings for other notable dividend stocks like Johnson & Johnson (NYSE:JNJ). Exxon Mobil Corp (NYSE:XOM) and Altria Group Inc (NYSE:MO).
At the close of Q1 2022, 50 hedge funds were long American Tower Corporation (NYSE:AMT) and held stakes worth $4.10 billion in the company. This is compared to 53 positions in the previous quarter with stakes worth $4.75 billion.
As of June 30, Locust Wood Capital Advisers is the largest shareholder in American Tower Corporation (NYSE:AMT) and has stakes worth $78.64 million in the company.
Here is what Richie Capital Group, an investment management firm, said about American Tower Corporation (NYSE:AMT) in its second-quarter 2022 investor letter:
“The portfolio positions that increased during the quarter likely did so because of the sectors in which they are categorized as opposed to any company specific news. American Tower (NYSE:AMT) is one of the largest global REITs. The company owns and operates multi-tenant cell towers globally. Our long tenured investment is based on their impenetrable business model and the long tail of the current 5G investment cycle that will extend over the next decade. Carriers are in the early stages of upgrading their cell sites with new equipment to provide contiguous 5G coverage globally. Additionally, since 5G technology requires increased cell site density, cellular carriers will need to invest extensively to ensure strong performance across their networks.”
8. Prologis, Inc. (NYSE:PLD)
Number of Hedge Fund Holders: 37
Dividend Yield as of July 22: 2.51%
Prologis, Inc. (NYSE:PLD) is a leading global logistics real estate investment trust that invests in warehouses and is concentrated on high-barrier, high-growth markets. As of July 22, Prologis, Inc. (NYSE:PLD) has a forward dividend yield of 2.51% and trailing twelve-month free cash flows of $3.02 billion. On July 21, Raymond James analyst William Crow trimmed his price target on Prologis, Inc. (NYSE:PLD) to $160 from $190 but reiterated a Strong Buy rating on the shares.
On July 18, Prologis, Inc. (NYSE:PLD) released earnings for the fiscal second quarter of 2022. The company reported funds from operations of 1.11, in line with Wall Street consensus. The company’s revenue came in at $1.25 billion, up 8.7% year over year, and beat market expectations by $160 million. Moreover, Prologis, Inc. (NYSE:PLD) reported average occupancy of 97.6% for the quarter.
Along with its earnings release, Prologis, Inc. (NYSE:PLD) raised its full-year 2022 guidance and said that it expects its core FFO to range between $5.14 and $5.18, up from its prior view of $5.10 and $5.16, with Wall Street consensus at $5.15. The company also expects to see average occupancy for fiscal year 2022 to range between 97.25% and 97.75%, up from its prior view of a range between 96.75% and 97.50%.
At the end of Q1 2022, 37 hedge funds were bullish on Prologis, Inc. (NYSE:PLD) with stakes worth $546.54 million. This is compared to 37 hedge funds in Q4 2021 with stakes of $544.35 million.
As of March 31, AEW Capital Management owns over 2 million shares of Prologis, Inc. (NYSE:PLD) and is the largest shareholder in the company. AEW Capital Management’s stakes in the company are valued at $326.89 million.
7. Welltower Inc. (NYSE:WELL)
Number of Hedge Fund Holders: 25
Dividend Yield as of July 22: 3.00%
Welltower Inc. (NYSE:WELL) invests in healthcare infrastructure and has a portfolio of over 1400 properties spread across the United States, Canada, and the United Kingdom. As of July 22, Welltower Inc. (NYSE:WELL) has a forward dividend yield of 3.00%, which the company supports with trailing twelve-month free cash flows of $1.27 billion.
Wall Street is bullish on healthcare REITs. On July 1, Mizuho analyst Vikram Malhotra lowered his price target on Welltower Inc. (NYSE:WELL) to $93 from $96 but reiterated a Buy rating on the shares. On July 13, Deutsche Bank analyst Derek Johnston cut his price target on Welltower Inc. (NYSE:WELL) to $100 from $108 and reiterated a Buy rating on the shares. The analyst expects senior housing-focused names to outperform in the second half of 2022.
Insider Monkey spotted Welltower Inc. (NYSE:WELL) on 25 investment portfolios at the close of Q1 2022. The total stakes of these hedge funds amounted to $691.65 million, up from $485.24 million in the previous quarter when 23 hedge funds held stakes in the company. The hedge fund sentiment for the stock is positive.
As of Q1 2022, Zimmer Partners is the most prominent shareholder in Welltower Inc. (NYSE:WELL) and has stakes worth $338.89 million in the company.
6. AvalonBay Communities, Inc. (NYSE:AVB)
Number of Hedge Fund Holders: 29
Dividend Yield as of July 22: 3.24%
AvalonBay Communities, Inc. (NYSE:AVB) is a real estate investment trust that invests in apartments. As of July 22, AvalonBay Communities, Inc. (NYSE:AVB) is offering a forward dividend yield of 3.24% and has a trailing twelve-month FCF of $1.06 billion.
On June 28, KeyBanc analyst Austin Wurschmidt trimmed his price target on AvalonBay Communities, Inc. (NYSE:AVB) to $237 from $275 and reiterated a buy-side Overweight rating on the shares. On July 15, Morgan Stanley analyst Richard Hill cut his price target on AvalonBay Communities, Inc. (NYSE:AVB) to $210 from $225 but maintained an Overweight rating on the shares.
At the end of the first quarter of 2022, 29 hedge funds held stakes in AvalonBay Communities, Inc. (NYSE:AVB) worth $401.83 million. This is compared to 36 positions in the previous quarter with stakes worth $697.32 million.
In the first quarter of 2022, AEW Capital Management raised its stakes in AvalonBay Communities, Inc. (NYSE:AVB) by 17%, bringing them to $171.50 million. AEW Capital Management is the largest shareholder in the company.
5. Agree Realty Corporation (NYSE:ADC)
Number of Hedge Fund Holders: 21
Dividend Yield as of July 22: 3.71%
Agree Realty Corporation (NYSE:ADC) acquires and develops properties that are net leased to industry-leading retail tenants. On June 22, Credit Suisse analyst Tayo Okusanya initiated coverage of Agree Realty Corporation (NYSE:ADC) with a buy-side Outperform rating and a $78 price target and named the stock one of his top picks. On June 30, Jefferies analyst Linda Tsai raised her price target on Agree Realty Corporation (NYSE:ADC) to $82 from $80 and reiterated a Buy rating on the shares.
On July 12, Agree Realty Corporation (NYSE:ADC) declared a monthly cash dividend of $0.234 per share. The dividend is payable on August 12, to investors of record on July 29. As of July 22, Agree Realty Corporation (NYSE:ADC) has a forward dividend yield of 3.68% and trailing twelve-month free cash flows of $261.98 million.
At the close of Q1 2022, 21 hedge funds held stakes in Agree Realty Corporation (NYSE:ADC). The collective stakes of these hedge funds amounted to $141.55 million. This is compared to 26 positions in the previous quarter with stakes of $200.33 million.
As of March 31, Millennium Management is the top shareholder in Agree Realty Corporation (NYSE:ADC) and has stakes worth $50.50 million in the company.
4. Digital Realty Trust, Inc. (NYSE:DLR)
Number of Hedge Fund Holders: 31
Dividend Yield as of July 22: 3.90%
Digital Realty Trust, Inc. (NYSE:DLR) invests in carrier-neutral data centers and provides colocation and peering services. As of July 2022, Digital Realty operates 167 data centers worldwide, of which 155 are in North America. As of July 22, Digital Realty Trust, Inc. (NYSE:DLR) is offering a forward yield of 3.90% and has trailing twelve-month free cash flows of $1.65 billion.
Wall Street is bullish on Digital Realty Trust, Inc. (NYSE:DLR). On June 30, Jefferies analyst Jonathan Petersen upgraded Digital Realty Trust, Inc. (NYSE:DLR) to Buy from Hold and raised his price target on the stock to $160 from $151. On July 1, Wells Fargo analyst Eric Luebchow reiterated a buy-side Overweight rating on Digital Realty Trust, Inc. (NYSE:DLR).
As of March 31, Jasper Ridge Partners is the largest stakeholder in Digital Realty Trust, Inc. (NYSE:DLR) and has stakes worth $92.51 million in the company. The investment covers 4.39% of the fund’s 13F portfolio.
At the close of the first quarter of 2022, 31 hedge funds held stakes in Digital Realty Trust, Inc. (NYSE:DLR). The total value of these stakes came in at $556.70 million, up from $409.09 million a quarter ago with 26 positions. The hedge fund sentiment for the stock is positive.
3. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 22
Dividend Yield as of July 22: 4.21%
Realty Income Corporation (NYSE:O) invests in freestanding, single-tenant commercial properties in the United States, Spain, and the United Kingdom. As of July 22, Realty Income Corporation (NYSE:O) is offering a forward dividend yield of 4.21% and has trailing twelve-month free cash flows of $1.56 billion.
On July 12, Realty Income Corporation (NYSE:O) declared a monthly cash dividend of $0.2475 per share. The dividend is payable on August 15 to shareholders of record at the close of business on August 1.
Wall Street is bullish on Realty Income Corporation (NYSE:O). On June 22, Credit Suisse analyst Tayo Okusanya initiated coverage of Realty Income Corporation (NYSE:O) with an Outperform rating and a $75 price target. On June 30, Jefferies analyst Jonathan Petersen lowered his price target on Realty Income Corporation (NYSE:O) to $78 from $81 and reiterated a Buy rating on the shares.
Insider Monkey found 22 hedge funds bullish on Realty Income Corporation (NYSE:O) at the end of Q1 2022. The total stakes of these hedge funds amounted to $284.88 million. This is compared to 30 positions in the previous quarter with stakes of $398.85 million.
As of March 31, Glendon Capital Management owns over 1.8 million shares of Realy Income Corporation (NYSE:O) and is the largest shareholder in the company. The fund’s stakes in the REIT are valued at $128.68 million.
2. Boston Properties, Inc. (NYSE:BXP)
Number of Hedge Fund Holders: 20
Dividend Yield as of July 22: 4.45%
Boston Properties (NYSE:BXP) is the largest publicly-held developer and owner of Class A office properties in the United States. The company is concentrated in five markets: Boston, Los Angeles, New York, Washington DC, and San Francisco. On June 14, Boston Properties, Inc. (NYSE:BXP) declared a quarterly cash dividend of $0.98 per share. The dividend is payable on July 29 to investors of record at the close of business on June 30. As of July 22, the stock has a forward dividend yield of 4.45% and the company has free cash flows of $1.20 billion.
On July 6, Mizuho analyst Vikram Malhotra cut his price target on Boston Properties, Inc. (NYSE:BXP) to $105 from $135 but reiterated a Buy rating on the shares. The analyst noted that the risk/reward for office REITs is now moderately positive from completely negative in Q1 2022. On July 20, Deutsche Bank analyst Derek Johnston lowered his price target on Boston Properties, Inc. (NYSE:BXP) to $104 from $139 and reiterated a Buy rating on the shares.
At the end of the first quarter of 2022, 20 hedge funds were eager on Boston Properties, Inc. (NYSE:BXP) and held stakes worth $1.58 billion in the REIT. This is compared to 22 positions in the previous quarter with stakes of $1.50 billion.
In the second quarter of 2022, Arjuna Capital raised its stakes in Boston Properties, Inc. (NYSE:BXP) by 42%, bringing them to $1.66 million. Arjuna Capital is the largest shareholder in the REIT.
Diamond Hill Capital, an investment management firm, recently published its “Diamond Hill Long-Short Fund” first-quarter 2022 investor letter in which it mentioned Boston Properties, Inc. (NYSE:BXP). Here is what the firm said:
“Commercial real estate investment trust (REIT) Boston Properties (NYSE:BXP) has a solid balance sheet and good assets. However, as the largest public office REIT, it operates in a challenging space due to high capital expenditure needs, the ease of adding new supply and tenant leverage. BXP is also concentrated in large coastal markets that have high taxes and burdensome regulations, and subsequently have seen population outflows. We believe the combination of a tough business and a marginally worse environment given the rising acceptance of at-home work will be challenging over the long term for BXP.”
1. Healthpeak Properties, Inc. (NYSE:PEAK)
Number of Hedge Fund Holders: 24
Dividend Yield as of July 22: 4.50%
Healthpeak Properties, Inc. (NYSE:PEAK) is an American real estate investment trust that invests in real estate related to the healthcare industry including senior housing, life science, and medical offices. As of July 22, the stock is offering a forward dividend yield of 4.50% and has free cash flows of $866.70 million.
Wall Street is bullish on Healthpeak Properties, Inc. (NYSE:PEAK). On July 8, Citi analyst Nicholas Joseph upgraded Healthpeak Properties, Inc. (NYSE:PEAK) to Buy from Neutral after he trimmed his price target on the stock to $31 from $33. The analyst likes the company’s exposure to life science, on-campus medical office, and continuing care retirement communities which he believes gives Healthpeak Properties, Inc. (NYSE:PEAK) a competitive advantage over peers. On July 15, Morgan Stanley analyst Richard Hill cut his price target on Healthpeak Properties, Inc. (NYSE:PEAK) to $26 from $32.50 and reiterated an Equal Weight rating on the shares.
At the close of Q1 2022, 24 hedge funds were long Healthpeak Properties, Inc. (NYSE:PEAK) with stakes of $241.33 million. This is compared to 26 positions a quarter ago with stakes worth $248.64 million.
You can also take a look at Top 10 REIT Stocks Under $10 and 10 Best REIT Stocks to Buy Right Now
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Disclosure: None. 10 Dividend Paying REIT Stocks To Buy Now is originally published on Insider Monkey.
