In this article, we discuss the top 10 real estate stocks to buy now.
Real Estate Investment Trusts (REITs) own and usually operate real estate-related assets such as buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans. Real estate stocks are one of the great investments of all time due to the high dividend yields compared to other stocks since these companies are required to give back 90% of their profits to the investors as dividends.
The rapid rise of work-from-home trends around the world amid the COVID-19 pandemic affected the property sector. Despite this, a study by PWC reported that the industry continues to demonstrate its resilience by maintaining liquidity in capital markets. Real estate stocks were one of the top-performing sectors in S&P 500 with a total return of +46.2% last year. This is projected to improve this 2022 as things are returning to normal.
The leading subsector under REITs based on the Emerging Trends survey is the industrial/distribution subsector as it shows substantial investment and development prospects. Some of the stocks listed under this subsector are Americold Realty Trust (NYSE:COLD), STAG Industrial (NYSE:STAG), and Alpine Income Property Trust, Inc. (NYSE:PINE). Companies such as Essential Properties Realty Trust (NYSE:EPRT), Mid-America Apartment Communities, Inc. (NYSE:MAA), and UMH Properties (NYSE:UMH) rank behind as demand for housing for single-family and multifamily is predicted to rise with rents and pricing returning to previous highs. Hotels, offices, and retail were severely hit during the outbreak but have since recovered.
PGIM real estate reported that there are nine trends to look out for when considering investing in REITs. The nine trends are: Recovery turning to expansion, cities making a comeback, retail being back on the agenda, supply outlook remaining subdued, push for larger deals as investment volume grows, debt supply shifting toward a greater provision of non-bank capital, operational deals gaining further popularity, intensifying on the focus on green investments, and widening of the performance gap. Confidence in the business and profitability forecasts are high and are expected to grow further in the future years. Grand View Research predicts that the global market size of real estate will reach $5.85 trillion by 2030 with a compound annual growth rate (CAGR) of 5.2% starting this year.
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Our Methodology
We created a list of the top 10 real estate stocks to buy now. For each stock, we mentioned the hedge fund sentiment, dividend yield, number of hedge fund holders, market capitalization, latest dividend payout, and future growth catalysts.
With this context in mind, let’s now examine our list of the top 10 real estate stocks to buy now.
Top 10 Best Real Estate Stocks to Buy Now
10. Highwoods Properties, Inc. (NYSE:HIW)
Number of Hedge Fund Holders: 17
Forward Dividend Yield as of August 6, 2022: 5.9%
Highwoods Properties Inc. (NYSE:HIW) is a fully-integrated office REIT that owns, develops, acquires, leases, and manages properties primarily in Atlanta, Charlotte, Nashville, Orlando, Pittsburgh, Raleigh, Richmond, and Tampa’s best business districts (BBDs). The company owns 26.9 million square feet of space which are leased to over 1500 customers. According to their most recent report, 91.1% of their 162 buildings are already occupied across the eight markets mentioned.
Headquartered in Raleigh, the district accounts for 24% of HIW’s Net Operating Income (NOI), followed by Nashville at 22%, and Atlanta at 16%. The company recently acquired two sites in Charlotte, one in the Uptown CBD submarket and the other in the South End submarket. This represents a total investment of $230 million. The company continues to acquire, disposition, and develop across the BBDs.
The reported revenue of HIW for the first quarter of 2022 is $206.38 million which is a 12.3% year-on-year increase. According to the company’s profitability metrics, the Funds from Operations (FFO) for the first quarter was $1.03 per share, exceeding the $0.97 consensus. With this strong start, Highwoods raised its 2022 FFO outlook to $3.82-$3.98 per share, up from the previous range of $3.76-$3.92 considering the management’s view of the current and future market conditions. Even though the number of buildings has decreased over time, the average lease term has increased by 31% over the last decade. The company has a $3.6 billion market capitalization.
Insider Monkey has 17 hedge funds following Highwoods Properties, which has a forward dividend yield of 5.9% as of August 6, 2022. The board of directors declared a dividend of $0.50 per share this June 14, 2022. Mizuho rated Highwoods Properties Inc. (NYSE:HIW) Neutral with a price target of $46.
9. Agree Realty Corporation (NYSE:ADC)
Number of Hedge Fund Holders: 21
Forward Dividend Yield as of August 6, 2022: 3.66%
Agree Realty Corporation (NYSE:ADC) was founded in 1971 by Executive Chairman Richard Agree with the goal to acquire and develop properties leased to major merchants. It was publicly listed on the New York Stock Exchange in 1994 and has since grown its portfolio to 1,404 properties in 47 states with a total leasable space of 29 million square feet.
Walmart Inc (NYSE:WMT) holds 6.6% of ADC’s share with an annualized based rent of $24.5 million. This is followed by Tractor Supply Co (NASDAQ: TSCO), Dollar General Corp (NYSE:DG), and Best Buy Co Inc (NYSE: BBY). The company mainly focuses on retailers in the grocery, home improvement, and convenience store sectors which are all-time essentials, thus, keeping them firm in any situation.
ADC has a market capitalization of $5.50 billion and a price per share of $73.11 based on the latest report of July 2022. Insider Monkey has 21 hedge funds following Agree Realty Corporation (NYSE:ADC), which has a forward dividend yield of 3.66%. According to the company’s report, the adjusted FFO for the first quarter was $0.97, exceeding the $0.94 consensus. With total revenue of $98.34 million, the company beat the consensus of $96.12 million for the quarter.
The company is considered to have performed well over the past five years with a total shareholder return of 87.4%. Since 1994, the stock has returned a 13% compound annualized return, with 5.5% compound annualized dividend growth since 2012. ADC declared a dividend of $0.234 per share last June 2022.
Berenberg Bank and Baird maintained a buy rating for Agree Realty Corporation (NYSE:ADC). This stock is JMP Securities analyst Mitch Germain’s “top pick” since the company’s portfolio has proven to be “stout”, as seen by the fact that rents were still collected during the pandemic. Moreover, he stated that the company’s asset-recycling operations, while less vulnerable to economic fluctuations, positioned rentals to high-credit renters. Germain gave Agree Realty an Outperform rating with a price objective of $81.
8. Regency Centers Corporation (NASDAQ:REG)
Number of Hedge Fund Holders: 18
Forward Dividend Yield as of August 6, 2022: 3.98%
Regency Centers Corporation (NASDAQ:REG) is a self-administered and self-managed REIT that owns and operates grocery-anchored neighborhoods and community centers. The company was founded in 1963 and has grown its total market capitalization to $17 billion today. This is the second-largest shopping center REIT with more than 400 properties, 80% of which are grocery-anchored. The company is most visible in Miami, San Francisco, Los Angeles, New York, and Washington, DC.
Regency’s top tenants are Publix, Kroger Co (NYSE:KR), Amazon Whole Foods (NASDAQ:AMZN), and Albertsons Companies Inc. (NYSE:ACI) as the company continues to focus on necessity, service, convenience, and value. This stock works with well-known retailers around the United States in a variety of categories including essential retail and services, essential restaurants, and other retail and services.
REG consistently grew its dividends per share at a CAGR of 3.6% over the past eight years. Their Net Operating Income (NOI) is in a range of 2.5% to 3.0% annually which is primarily driven by contractual rent steps and releasing of space, and redevelopment activities. The reported Funds from Operations (FFO) per diluted share is $1.03 and guided for $3.87 per diluted share for 2022. A cash dividend of $0.6250 per share was given to the investors last July 6, 2022.
With 18 hedge fund holders based on Insider Monkey’s latest report and a dividend yield of 3.98%, REG positions among the top 5 best real estate stocks to buy now.
Richard Hill from Morgan Stanley sustained a Hold rating for Regency Centers Corporation (NASDAQ:REG) with a target price of $63. Juan C. Sanabria from BMO Capital kept a Buy rating for REG with a target price of $78. In general, The Street maintained a moderate buy rating for this stock.
7. Sun Communities, Inc. (NYSE:SUI)
Number of Hedge Fund Holders: 36
Forward Dividend Yield as of August 6, 2022: 2.2%
Sun Communities, Inc. (NYSE:SUI) is a fully integrated REIT established in 1975 and became publicly owned in 1993. With 646 developed MH, RV, and marina properties in 39 states in the United States, Canada, Puerto Rico, and the United Kingdom, the company is the leading owner and operator of manufactured housing (MH) communities, and recreation vehicles (RV) resorts, and marinas. Almost half of its revenue is generated from manufactured housing, 33% from RV, and the rest from marinas. One of the company’s strategies is property acquisition, and they were able to acquire $11.1 billion in properties over the decade, increasing the number of properties by 4.8x.
The company has experienced positive same community NOI growth consistently over the last 20 years which infers consistent and cycle-tested organic cash flow growth. Given the same period, SUI’s average annual same community NOI growth was 5.1% beating multi-family REITs of 2.5%. The company outperformed major REIT and broader market indices over the last ten years with 433.8% growth versus 260.7% growth for the S&P 500 and 120.6% growth for the MSCI IS REIT (RMS).
The company has 36 hedge fund holders and a forward dividend yield of 2.2%. The reported Q1 FFO is $1.34 beating the $1.33 expectation. This is a 6.3% growth in core FFO per share as confirmed by Chairman and CEO Gary Shiffman. Given this tailwind, the company increases its forecasted core FFO for 2022 to $7.20-$7.32 from the previous forecast of $7.07-$7.23 and a consensus of $7.19. The company also exceeded the $498.18 million revenue consensus by declaring $548.5 million in revenue last quarter.
SUI is paying a cash dividend of $0.88 per share in July. This REIT’s dividend has never dropped by more than 10% in the last ten years. The company has a market capitalization of $19.552 billion today.
Truist initiated a buy rating for Sun Communities with a price target of $185. The analyst believes that the market for housing communities, RV resorts, marinas, and holiday parks can provide “outsized growth at a reasonable valuation.” This comment is followed by JMP securities expecting the company’s internal and external growth to generate “outsized value creation.” and giving it an Outperform rating with a $220 price target.
6. Prologis, Inc. (NYSE:PLD)
Number of Hedge Fund Holders: 37
Forward Dividend Yield as of August 6, 2022: 2.16%
Prologis Inc. (NYSE:PLD) is the leading logistics real estate company with 984 million square feet worth of co-investment ventures, properties, and development in 19 countries. The company focuses on leasing to business-to-business and retail/online fulfillment customers including Amazon Com Inc (NASDAQ:AMZN), Home Depot Inc. (NYSE:HD), FedEx Corp (NYSE:FDX). With 98.1% leased as of March 2022, the company’s current market capitalization is $84.30 billion.
The world’s largest warehouse owner recently acquired Duke Realty Corp. (NYSE:DRE) which will add 160 million square feet to PLD’s portfolio. Shareholders of Prologis will own 80% of the REIT after this transaction while 20% will be going to DRE shareholders. The acquisition will be accretive in the first and second years when they plan to hold 94% of Duke’s portfolio. This is expected to increase FFO in the first year following the closing by the end of the year.
Prologis continues to report all-time highs this 2022 wherein the company posted an FFO of $1.09 during the first quarter which beats the consensus estimates by $0.02 per share. This is 12.4% more than last year’s result of $0.97 per share. In addition, they achieved $1.22 billion of revenue during the first quarter, beating Wall Street’s estimates. This represents a 6.1% year-on-year growth. The reported price per share increase during the last 5 years is +218% and +399% during the past decade, outperforming S&P 500 which gained 90.85% over the last 5 years and 224.08% over the last 10 years.
Investors of Prologis received a dividend of $0.79 per share of the company’s common stock and a dividend of $1.0675 per share of the company’s 8.54% series Q cumulative redeemable preferred stock last June 30, 2022. The company has a 2.16% forward dividend yield and 37 hedgefund holders.
While the recession will negatively impact most industries, this isn’t the case for industrial real estate. The rapid rise in industrial rents makes it much easier for landlords to come down hard on any deadbeat tenants. The company continues to grow amidst today’s volatile market and economic environment which makes it one of the top 10 best real estate stocks to buy now. Wells Fargo keeps an Overweight rating for Prologis lowering the price target from $184 to $160.
5. Equinix Inc (NASDAQ:EQIX)
Number of Hedge Fund Holders: 40
Forward Dividend Yield as of August 6, 2022: 1.84%
Equinix Inc (NASDAQ:EQIX) was founded in 1998 as a vendor-neutral multitenant data center. The name EQUINIX was coined from the company’s values which are EQUality, Neutrality, and Internet eXchange as they want to provide a secure connection and sharing of data traffic to their customers. EQIX has grown the company since and is now a global digital infrastructure company that interconnects industry-leading organizations in finance, manufacturing, retail, transportation, government, healthcare, and education. They provide more than 2000 network services, more than 3000 cloud, and IT services, more than 450 content and digital media services, and more than 4,700 enterprises. The company has continued to improve its performance for the past 17 years.
According to the company’s first-quarter 2022 report, quarterly revenues climbed by 10% to $1.7 billion compared to the first quarter of 2021. This is the 77th consecutive quarter of revenue growth for the company. They expect to beat the consensus of $1.79 billion and reach $1.81B-$1.83B by the second quarter. The Adjusted Funds for Operations (AFFO) per share increased by 15% to $7.16 per share over the previous quarter. There is also a 16% increase noted for the total AFFO, which is currently at $653 million. Investors were paid a dividend of $3.10 per share this June 15, 2022.
Even with 240 data centers across 30 countries, Equinix continues to expand. It recently announced its expansion plan in Chile, Africa, and Australia. EQIX is also agreed to form a strategic partnership with Entel which will gradually increase the company’s AFFO per share. Five facilities are expected to generate 55 million of annualized revenue and represent a purchase multiple of 23 times the enterprise value (EV) over 2021’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). The current market capitalization of EQIX is $70 billion and remains to be the largest data center REIT in the world.
BMO Capital kept a Market Perform rating for EQIX this May 25 though the price target was lowered to $770 from $825. The analyst called the demand for the company a “defensive” in tougher macro-environments due to increasing costs for power. Insider Monkey reports 40 hedge fund holders for this REIT. The forward dividend yield as of August 6, 2022 is 1.78%.
4. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 22
Forward Dividend Yield as of August 6, 2022: 4.08%
Realty Income (NYSE:O) is one of the 65 companies in the elite S&P 500 Dividend Aristocrats® Index as they have been investing in people and places for more than 50 years. The company promises to deliver dependable monthly dividends that increase over time with a compound average annual total shareholder return of 15.3% and a Compound Annual Dividend Growth Rate (CAGR) of 4.4% since it was publicly listed in 1994. O is reported to be one of the top ten global REITS with 11,200 real estate properties under long-term net lease agreements with commercial tenants. As of today, it has a market capitalization of $39.03 billion.
This stock collaborates with famous retailers around the United States and the United Kingdom with a strategy to invest in clients with a non-discretionary, low price point, and/or service-oriented component to their business. The company’s top tenants are Walgreens Boots Alliance Inc. (NASDAQ:WBA), Dollar General Corp (NYSE:DG), and Dollar Tree Inc. (NASDAQ:DLTR). Realty diversifies its portfolio by leasing 83.6% of its customers in the retail business, 14.4% in the industrial business, and 2.0% in others. Grocery stores (10.4%), convenience stores (9.1%), and dollar stores generate the majority of revenue (7.4%).
The reported 1Q2022 FFO is $0.98 beating a consensus of $0.97. The company’s total revenue for the quarter was also impressive, coming in at $807.3 million versus a consensus estimate of $765.88 million. The company is expecting to reach the 2022 AFFO consensus of $3.94 with a range of $3.84-$3.97 AFFO.
The board of directors declared a dividend of $0.2475 per share for July 2022 which is the 116th dividend increase since its listing on the NYSE in 1994. This is a 0.2% increase from the last dividend of $0.2470 per share. Realty currently has 22 hedge fund holders based on Insider Monkey’s latest report and a dividend yield of 4.08%.
Realty Income (NYSE:O) downgraded to Peer Perform rating Wolfe Research with a target price of $73. Though the stock was given an Outperform rating last March, financial analysts do not see Realty increase its valuation for the past couple of months, making it the 8th best real estate stock to buy now.
3. STAG Industrial, Inc (NYSE:STAG)
Number of Hedge Fund Holders: 21
Forward Dividend Yield as of August 6, 2022: 4.42%
The Environment, Social, and Governance (ESG) is one of the trends to look out for in 2022 when choosing the best real estate stocks to buy now. One of the leading ESG companies is STAG Industrial, Inc. (NYSE:STAG). This stock focuses on the acquisition and operation of industrial properties.
STAG has an enterprise value of $10.9 billion, owning 544 buildings in 40 states with 108.6 million rentable square feet. This consists of 459 warehouse/distribution buildings, 74 light manufacturing buildings, 2 flex/office buildings, 9 value add portfolio buildings, and 2 single and multi-tenant properties.
The pressure on the supply chain is high causing continuous demand for warehouse spaces. STAG’s portfolio handles almost 40% of e-commerce activities and is expected to increase by 30% after 7 years with a 13% sales CAGR. The reported core FFO for Q1 is $0.53 beating a consensus of $0.52. The company’s total revenue for this quarter was impressive, coming in at $159.21 million versus a consensus estimate of $155.94 million.
Based on Insider Monkey’s latest report, there are 21 hedge fund holders for the company. The board of directors declared a dividend of $1.46 per share paid on July 7, 2022. STAG has had an average dividend growth rate of 0.84% for the last three years. The latest reported forward dividend yield is 4.42% which makes STAG Industrial, Inc. one of the best investments to make now.
STAG Industrial, Inc. (NYSE:STAG) received an Outperform rating from Baird, up from a neutral rating, with a price target of $48. Michael Mueller from J.P. Morgan maintained a Hold rating for STAG with a target price of $39. In general, the Street puts a moderate buy rating for this REIT with an average price target of $44.29.
2. Essential Properties Realty Trust (NYSE:EPRT)
Number of Hedge Fund Holders: 19
Forward Dividend Yield as of August 6, 2022: 4.34%
Essential Properties Realty Trust (NYSE:EPRT) which is led by president and CEO Pete Mavoides, aims to create opportunities for growth and entrepreneurship in the middle market. The company acquires, owns, and manages single-tenant properties which are then leased to service-oriented or experience-based businesses such as restaurants, car washes, automotive services, medical and dental services, convenience stores, equipment rental, entertainment, early childhood education, grocery, and health and fitness on a long-term basis. EPRT owns 1,545 properties in 46 states all of which are leased to 323 tenants operating in 16 industries.
According to the company’s first-quarter 2022 report, net income per share climbed by 50% to $0.21, while Adjusted Funds for Operations (AFFO) per share increased by 27% to $0.38. Pete Mavoides commented that they increased their 2022 AFFO per share guidance range to $1.50-$1.53 as their balance sheets and investments continue to strengthen.
The current market capitalization of EPRT is $3.50 billion with 19 hedge fund holders and a yield of 4.34%. Essential Properties paid a dividend of $0.27 per share to their investors this 14th of July, 2022 which is a 3.8% increase over the previous quarter.
Essential Properties Realty Trust (NYSE:EPRT) has been rated as a Buy by Stifel Evercose ISI and RJ Milligan, with a price objective of $28. Analysts rate the stock as a strong buy with a price objective of $30.92. This places Essential Properties as the second-best REIT to buy now.
1. Alpine Income Property Trust, Inc. (NYSE:PINE)
Number of Hedge Fund Holders: 8
Forward Dividend Yield as of August 6, 2022: 5.94%
First on the list for the best real estate stock to buy now is Alpine Income Property Trust, Inc. (NYSE: PINE) which acquires, owns, and operates high-quality net leased properties. Similar to Agree Realty Corporation (NYSE:ADC), their main focus is on industry-leading tenants and essential business sectors to ensure long-term value creation. Though the company was recently formed in August 2019, it is positioned as unique because it has no employees and is governed by Alpine Income Property Manager. The company owns 128 properties across 34 states including Walmart Inc. (NYSE:WMT), Walgreens Boots Alliance Inc. (NASDAQ:WBA), and Wells Fargo & Co. (NYSE:WFC).
The company’s market capitalization is $252 million with a total enterprise value (TEV) of $529 million which is not surprising given that all of its properties are already occupied. In addition, PINE acquired 16 high-quality net lease properties valued at $65.5 million during the first quarter.
Alpine Income Property Trust, Inc. (NYSE: PINE) has only 8 hedge fund holders but it expects to have the highest dividend yield of the preceding firms with a dividend yield of 5.94%. The reported Q1 AFFO is $0.48 beating the $0.43 expectation. Moreover, the company announced $10.8 million in revenue versus the $10.37 million in the general agreement. Alpine Income Property increased its AFFO outlook for 2022 to $1.53-$1.58 from $1.51-$1.56 due to these significant tailwinds. Alpine has a high rollover of 29% for the next decade making it more secure and increasing the risk-return profile of the REIT.
PINE paid a cash dividend of $0.27 per share for the first and second quarters of 2022. This is a 12.5% increase over the 4th quarter of 2021’s payout and a 5.6% annualized yield. The quarterly dividend has grown by 35% since the beginning of 2020 making it the highest dividend yield with one of the lowest projected payout ratios.
Global financial firms Colliers Securities and BTIG maintained a buy rating for Alpine Income Property with a price target of $23. The current analyst consensus for this REIT is a strong buy with a $22.20 average target price which is 14.1% higher than the current levels.
The company has undeniably strong financials making it the top real estate to buy now.
You can also take a peek at 12 Best Consumer Discretionary Stocks To Buy and George Soros Stock Portfolio.
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Disclosure: None. Top 10 Real Estate Stocks to Buy Now is originally published on Insider Monkey.
