In this article, we discuss the top 5 real estate stocks to buy now. If you want to read our detailed analysis of the real estate industry, go directly to Top 10 Real Estate Stocks to Buy Now.
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.
