If you thought June was rough from an interest rate standpoint, July may be just as bad, as some of the Federal Reserve governors now are starting to hint that another 75-basis-point increase to the federal funds rate could be in order. As we have noted before, the old saying of “Don’t fight the Fed” works both ways. There is a good chance the central bank will continue to raise rates until the spiraling inflation starts to calm down.
One asset class that tends to survive rate increases and inflationary times is real estate investment trusts, or REITs. As overall costs rise, so do rents and leases that REITs hold. In fact, during a recent rate-hiking cycle, REITs outperformed the S&P 500 by more than double. In addition, rising rates are forcing some potential homebuyers to remain in rentals, whether it be houses or apartments.
We screened our 24/7 Wall St. REIT research database looking for solid ideas that also pay large and dependable dividends. While all seven stocks we uncovered are rated Buy at major Wall Street firms, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Getty Realty
Despite climate change concerns, people still need gasoline for their cars, trucks and vans, and gas stations still provide that basic need. Getty Realty Corp. (NYSE: GTY) is a publicly traded, net lease REIT specializing in the acquisition, financing and development of convenience, automotive and other single-tenant retail real estate. As of March 31, 2022, the company’s portfolio included 1,014 properties in 38 states and the District of Columbia.
With big footprints in both Texas and California, the company serves some of the most populated regions of the country, and last week it posted strong first-quarter results wherein funds from operations surpassed Wall Street expectations.
Shareholders receive a 6.14% distribution. JMP Securities has a $32 target price on Getty Realty stock. The consensus target is $32.75, and the stock was last seen on Wednesday trading at $26.59.
Iron Mountain
Many businesses turn to this company to store data or documents. Iron Mountain Inc. (NYSE: IRM), founded in 1951, is the global leader in secure storage and information management services. Trusted by more than 225,000 organizations around the world, and with a real estate network of more than 90 million square feet across approximately 1,450 facilities in approximately 50 countries, Iron Mountain stores and protects billions of valued assets, including critical business information, highly sensitive data and cultural and historical artifacts.
Its solutions include secure records storage, information management, digital transformation and secure destruction, as well as data centers, cloud services and art storage and logistics. Iron Mountain helps customers lower cost and risk, comply with regulations, recover from disaster and enable a more digital way of working.
Shareholders receive a 5.03% dividend. Barclays recently started coverage on Iron Mountain stock and its price target is $58. That compares with a $55.42 consensus target and Wednesday’s close at $48.18.
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 7.45% distribution. The $22 RBC Capital Markets price target compares with a $22.50 consensus target. Medical Properties Trust stock closed trading on Wednesday at $15.94.
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.
The company is structured as a REIT, and its 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 54-year operating history and increased the dividend 109 times since its public listing in 1994, and it is a member of the S&P 500 Dividend Aristocrats index.
Realty Income stock comes with a 4.30% distribution. Credit Suisse recently initiated coverage and set a $75 price objective. The consensus target is $75.27, and $69.36 was the closing share price on Wednesday.
24/7 Wall St.Simon Property
Shares of this leading company have been pounded and are offering the best entry point since last year. Simon Property Group Inc. (NYSE: SPG) is a very strong company for investors looking to play the industry. It invests in real estate markets across the globe. It engages in investment, ownership, management and development of properties. The company primarily invests in regional malls, premium outlets, mills and community/lifestyle centers to create its portfolio.
Through its subsidiary partnership, Simon Property owns or has an interest in about 230 properties in the United States and Asia. The company also has a 28.9% interest in Klepierre, a European REIT with over 260 shopping centers in 13 countries.
Shareholders receive a 6.85% distribution. The Compass Point price target of $160 is higher than the $148.47 consensus target on Simon Property stock. The shares ended Wednesday at $97.26.
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 has been 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 in January) 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.
In addition, the company recently closed a $17.2 billion deal to buy out rival gaming REIT MGM Growth Properties, which owns the real estate of 15 casinos and resorts in eight states, including seven properties on the Las Vegas Strip. All of MGM Growth’s properties are operated by MGM Resorts International.
Investors receive a 4.72% distribution. Goldman Sachs is very positive and recently lifted its $35 target price to $39. The consensus target is $35.42, and VICI Properties stock closed at $29.87 on Wednesday.
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.
W.P. Carey stock investors receive a 5.05% distribution. The $90 price target at Raymond James is higher than the consensus target of $88.64. The shares closed on Wednesday at $83.95.
Most of these top companies have been hit by rising interest rates and the large-scale selling all across Wall Street of every sector. These top companies are all leaders in their specific REIT subsectors and offer multiple ways for investors to get steady growth and be paid substantial dependable income. Lastly, all are offering the best entry points in well over a year.
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