In terms of REIT investments for the next six months, you’ll want to find names that fit the following criteria. First, you need to find the REITs that can still thrive in a rising rate environment. This means the ones best positioned to raise lease/rental rates.
Second, you need to find REITs that can ride out a possible economic slowdown. In other words, REITs in areas like industrial properties. Or, in multifamily housing, such as apartment buildings.
With all of that in mind, these seven real estate investment trusts, all earning an “A” in my Portfolio Grader, meet the criteria. So, consider them some of the best REITs to buy today.
| Ticker | Company | Price |
| CPT | Camden Property Trust | $138.10 |
| HST | Host Hotels & Resorts | $19.65 |
| IRT | Independence Realty Trust | $22.38 |
| MAA | Mid-America Apartment Communities | $173.05 |
| PLD | Prologis | $119.62 |
| PSA | Public Storage | $309.65 |
| REXR | Rexford Industrial Realty | $63.25 |
Based in Houston, Texas, Camden Property Trust (NYSE:CPT) owns and manages apartment communities with a focus on “sunbelt” markets in the Southeastern United States. During the pandemic, as the “stay at home economy” meant widespread remote work, Camden thrived. Its markets were top places remote workers were flocking to.
Yet, now, this pandemic catalyst isn’t doing it any favors. The end of the pandemic, coupled with raising interest rates, has raised concerns it will produce underwhelming results going forward.
Even so, it’s possible that the market has become pessimistic too fast. Housing demand in its key markets remains robust. This REIT is expected to see a double-digit rise in its funds from operations (FFO) this year. FFO is the REIT equivalent to earnings. With a 2.7% forward dividend yield to boot, you may want to take advantage of its recent pullback, and make CPT stock a buy.
This stock has an “A” rating in my Portfolio Grader.
Host Hotels & Resorts (NASDAQ:HST) is next on this list of best REITs to buy. Shares in this hotel owner have already benefited from “the reopening,” and the boom in demand for travel.
However, with the threat of a recession, you may be concerned that not only its recovery is priced-in, but that a cooldown in travel/vacation demand isn’t. My view? It’s still too early to make that assumption. The “return to normal” for vacations may already be factored into its valuation.
There’s something else, though, that might not be. And that’s the return of business travel.
At least, that’s what analysts at S&P Global Ratings have recently argued. The credit agency recently upgraded its rating of the REITs debt, citing strengthening demand among business travelers. Trading for just 12.3x this year’s expected funds from operation (FFO), consider HST stock at its current price.
This stock has an “A” rating in my Portfolio Grader.
Like Camden, Independence Realty Trust (NYSE:IRT) is a sunbelt-focused apartment REIT. It’s also a name that took off in 2021, thanks to booming demand in such markets.
In the past month, though, the market’s fears have resulted in a big move lower for IRT stock. Since mid-April, it’s dropped around 20%. Again, this is another example of investors jumping too quickly to conclusions. Apartment leases have a relatively quick turnover. It has the flexibility to raise rents in order to keep up with inflation/rising interest rates.
This, in turn, will enable it to continue delivering steady FFO growth. Not to mention, enable it to maintain its current rate of payout of 12 cents per quarter and 48 cents per year for its dividend. As of now, it has a forward yield of 2.1%. Therefore, this is another high-quality REIT to add to your watchlist.
This stock has an “A” rating in my Portfolio Grader.
One of America’s largest multifamily REITs, Mid-America Apartment Communities (NYSE:MAA) has more than 100,000 units under its belt. As InvestorPlace’s Tezcan Gecgil argued last month, it’s benefiting from the same trends that are working in the favor of multifamily REITs overall.
Inflation and high demand for housing are helping it continually grow its revenue and FFO figures. There’s also something else in play that will help it keep growing: expansion of its portfolio through development. Per Gecgil, this year management says the firm will have $1.2 billion in active projects.
Moreover, reasonably-priced MAA stock offers up a solid dividend, boasting a 2.9% forward yield. It has also increased its dividend 12 years in a row. The average annual dividend increase over the past five years has been 4.56%. Dropping in recent weeks due to external uncertainties, this is yet another high-quality real estate play to consider scooping up.
This stock has an “A” rating in my Portfolio Grader.
Prologis (NYSE:PLD) builds and leases out warehouse properties, and does it well. That’s the best way in a nutshell to describe this REIT. Operating on a global basis, it has crushed it in recent years, thanks to the stunning growth of e-commerce.
But don’t take this to mean that a slowdown in e-commerce growth post-pandemic means things are slowing down for Prologis. As I argued last month, there’s much to suggest it’ll continue to deliver strong operating performance. First, the company is continuing to grow its presence. Second, it’s able to adjust to high inflation, by raising its lease rates.
With this, the market has likely overreacted by sending PLD stock down 26.6% over the past month. Sporting a 2.5% forward yield, it has a track record of steady dividend growth. Over the past five years, average annual dividend growth has come in at 9.51%.
This stock has an “A” rating in my Portfolio Grader.
A leader in the self-storage industry, Public Storage (NYSE:PSA) is another great REIT to consider buying today. Like other REITs, uncertainties about inflation and interest rates have caused shares to drop in recent weeks.
However, Public Storage may have both risks well under control. Regarding inflation, self-storage companies have flexibility when it comes to increasing rental rates to keep pace with inflation. As for interest rates? Back in March, InvestorPlace’s Josh Enomoto pointed out that this REIT has a unique financing method.
That would be its use of preferred stock to raise capital. This has enabled it to lock down financing that never matures, at a historically low fixed rate of around 4%. In short, well-covered when it comes to these key issues, PSA stock — with a forward dividend yield of 2.5% — has a high chance of recovering quickly, as the market becomes aware of these details.
This stock has an “A” rating in my Portfolio Grader.
Rexford Industrial Realty (NYSE:REXR) is not a household name but if you’ve been looking for a way to “play” the supply chain crisis? This industrial REIT may be one of the best ways to do so.
Why? Rexford’s focus is on industrial properties in Southern California. It owns many of the warehouses used to store cargo from America’s two largest seaports in Los Angeles and Long Beach. The supply chain headwinds have been a boon for it. In 2021, rental revenue climbed 37.1%. A similar level of revenue growth is expected this year, as well as a further jump in FFO.
Better yet, even if the supply chain crisis and the U.S.-China trade tensions ease, it’ll likely continue to see strong results, as logistics has its “return to normal” moment. If you’re looking for a growth-focused REIT, you may want to buy REXR stock.
This stock has an “A” rating in my Portfolio Grader.
Original Post Can be Found Here