There is an adage among real estate investors that says you cannot make or create any more land. While you can always build higher, you still need the land. One of the best assets that most investors are underweighted on is real estate. Those who own a home are technically real estate investors, but homeownership does not produce any income, unless you have rental homes, which can be very capital intensive, not to mention time-consuming.
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The inflation conditions this year are the worst since the early 1980s, and there is no reason to expect things will improve any time soon. In fact, according to the National Federation of Independent Business, about 40% of U.S. small businesses intend to raise prices by 10% or more this year. Add in spiraling food and gasoline prices, and the picture for the rest of 2022 looks increasingly grim.

Real estate investment trusts (REITs) can act as a hedge against inflation by capitalizing on cheap mortgage interest rates, passing through rising costs to commercial or residential tenants with higher rent prices, and benefiting from rising values over the long term. Most of the top companies in the business have secured cheap capital, and even though rates are headed higher this year, the Federal Reserve’s target of 3.0% to 3.5% for federal funds is still low on a historical basis.

We screened our 24/7 Wall St. REIT research universe and found seven top stocks that are all Buy-rated on Wall Street and pay very secure and big dividends. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Gladstone Commercial

This stock has been hit hard as interest rates charged higher and is offering the best entry point since last November. Gladstone Commercial Corp. (NASDAQ: GOOD) is focused on acquiring, owning and operating net leased industrial and office properties across the United States.

As of June 30, 2021, Gladstone owns a diversified portfolio of 121 office and industrial properties located in 27 states and leased to 106 tenants. The company has grown the portfolio in a consistent, disciplined manner at a rate of 18% per year since going public in 2003. It matches long-term leased properties with long-term debt to lock in the spread to create a durable, stable cash flow stream to fund monthly distributions to shareholders. Current occupancy stands at 96.5%, and that occupancy has never dipped below 95.0% since 2003.

Most importantly for investors, Gladstone has a track record of success, as exhibited by a history of strong distribution yields, consistent occupancy and more than 10 years of paying continuous monthly cash distributions.

Investors receive a rich 7.01% distribution. Aegis has a Wall Street high $26 price target, which may be headed higher soon. The consensus target for Gladstone Commercial stock is $25. The last trade for Tuesday was at $21.46 a share.

Income investors should take a long look at this company. Global Medical REIT Inc. (NASDAQ: GMRE) is a net-lease medical office REIT that acquires purpose-built specialized health care facilities and leases those facilities to strong health care systems and physician groups with leading market share.
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The company seeks to deliver attractive, risk-adjusted returns by investing in quality health care properties. Management targets properties operated by profitable health care systems or physician groups that are at the forefront of delivering needed care in their communities. The company’s distinct approach is rooted in its knowledge of the industry and its hard-working team, bolstered by strong demographics and favorable health care delivery trends.

Shareholders receive a 5.58% distribution. The Berenberg Bank target price on Global Medical REIT stock is $18, and the consensus target is $18.44. The stock closed on Tuesday at $15.05.

Medical Properties Trust

This stock may offer investors the best value at current price levels. Medical Properties Trust Inc. (NYSE: MPW) acquires, develops and invests in health care facilities and leases health care facilities to health care operating companies and providers. The company also provides mortgage loans to health care operators, as well as working capital and other term loans to its tenants/borrowers.

With a growing portfolio and a versatile business model, the company continues to rank high across Wall Street. The analysts noted that the company’s acute care hospitals rent coverage increased nicely and the company attributed the increase to better cost controls and higher patient admissions.

Shareholders receive a 6.40% distribution. Credit Suisse’s $26 price target is a Wall Street high. The consensus target is $24.07, and Medical Properties Trust stock closed on Tuesday at $18.12.

MGM Growth Properties

This company is a triple net lease REIT formed in April 2016 when it was spun out of MGM Resorts. MGM Growth Properties LLC (NYSE: MGP) is one of the leading publicly traded REITs engaged in the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts with diverse amenities including casino gaming, hotel, convention, dining, entertainment and retail offerings.
The company, together with its joint venture, currently owns a portfolio of properties, consisting of 12 premier destination resorts in Las Vegas and elsewhere across the United States; MGM Northfield Park in Northfield, Ohio; Empire Resort Casino in Yonkers, New York; as well as a retail and entertainment district, The Park, in Las Vegas.
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The destination resorts collectively comprised approximately 27,400 hotel rooms, 1.4 million casino square footage, and 2.7 million convention square footage. As a growth-oriented public real estate entity, the company expects its relationship with MGM Resorts and other entertainment providers to position the company attractively for the acquisition of additional properties across the entertainment, hospitality and leisure industries.

Investors in MGM Growth Properties stock receive a 5.26% dividend. The $43 Deutsche Bank price target compares with the $41.20 consensus target and the most recent close at $40.30 a share.

Realty Income

This is an ideal stock for growth and income investors looking for a safer, inflation-busting idea for 2022. Realty Income Corp. (NYSE: O) is an S&P 500 company dedicated to providing stockholders with dependable monthly income.

This REIT’s monthly distributions are supported by the cash flow from over 6,500 real estate properties owned under long-term lease agreements with commercial tenants. To date, the company has declared 608 consecutive common stock monthly dividends throughout its 52-year operating history and increased the dividend 109 times since its public listing in 1994. It is a top real estate member of the S&P 500 Dividend Aristocrats index.

Investors receive a 4.12% distribution. The Realty Income stock price target at Goldman Sachs is up at $87, well above the $77.69 consensus target and the $71.93 per share close on Tuesday.

VICI Properties

This is the top pick across Wall Street in the net lease group, and it is an ideal pick for investors who are more conservative and looking for gaming exposure. VICI Properties Inc. (NYSE: VICI) is a triple net lease REIT that was spun out of Caesars Entertainment post-bankruptcy.

The company has 23 mixed-use gaming, lodging and entertainment properties in its portfolio, and a subsidiary that owns four championship golf courses. VICI also owns roughly 34 acres of undeveloped land in Las Vegas, which it leases to Caesars.
Much of the focus this year was on VICI’s recent deal to acquire the real estate of the Venetian Resort in Las Vegas, with Apollo as a new tenant. Looking ahead, many on Wall Street are very positive on VICI’s embedded growth pipeline with Caesars Entertainment, including a put/call on the Centaur properties in Indiana (starting this month) and a right of first refusal on a strip asset sale for Caesars, which could occur soon after a full earnings before interest, taxes, depreciation, amortization and restructuring or rent costs recovery.
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VICI Properties stock investors receive a 4.77% distribution. BofA Securities has set its price target at $36. The consensus target is $35.13, and shares closed trading on Tuesday at $29.56.

W.P. Carey

This is a large net lease REIT with an incredible distribution for income investors. W.P. Carey Inc. (NYSE: WPC) ranks among the largest net lease REITs, with an enterprise value of approximately $18 billion and a diversified portfolio of operationally critical commercial real estate that includes 1,215 net lease properties covering approximately 142 million square feet, as of September 30, 2020.

For nearly five decades, the company has invested in high-quality single-tenant industrial, warehouse, office and retail properties subject to long-term leases with built-in rent escalators. Its portfolio is located primarily in the United States and northern and western Europe, and it is well diversified by tenant, property type, geographic location and tenant industry.

Investors receive a 5.04% distribution. The Raymond James target price is $90. The consensus target is $88.33. W.P. Carey stock was last seen trading at $83.83.

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Almost all these top companies have been hit by the parabolic move higher in interest rates. While growth investors do not need to overweight the sector, a low double-digit position, especially for growth and income investors, makes sense for those with a long-term investment horizon.

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