10 REITs For 2021
REITs have largely been lagging the greater market, rightfully so, but long-term investors can find great REITs to add at great prices
Hello Everyone!
As promised, here is Part III of my “Stocks For 2021” Newsletter series. Today, we are going to take a look at 10 REITs I like for 2021.
Disclaimer: The stocks mentioned below are not intended to be a list of buy ratings. Stocks can sometimes move in a volatile fashion, so it is important to first perform your own due diligence or contact your financial advisor. Each investor has their own goals and risk appetite, which should be considered prior to investing. This list is to be used for informational purposes only.
10 REITs For 2021
1. STORE Capital (STOR)
Stock Price: $30.59
Market Cap: $8.1 Billion
1-Yr Performance: -15.5%
Dividend Yield: 4.7%
2021 Estimated Sales: $758.4 Million
STORE Capital is a net-lease REIT which simply means many of the typical real estate ownership costs are passed to the tenant. This includes Property Taxes, Maintenance, and Insurance costs to name a few things that a net-lease landlord is not responsible, which means they are focused on collecting rents. STORE Capital is considered a retail REIT with the longest term leases in the space, with an average lease term of 14 years. Warren Buffett does not own many REITs, but he does own shares of STORE Capital, having invested another round in the REIT this past year.
2. Realty Income Corporation (O)
Stock Price: $59.42
Market Cap: $21.0 Billion
1-Yr Performance: -19.8%
Dividend Yield: 4.7%
2021 Estimated Sales: $1.7 Billion
Realty Income is one of the most well-known REITs around. The company is the gold standard in the REIT sector and has been the epitome of consistency having paid 605 consecutive monthly dividend payments. Similar to STORE Capital, Realty Income is also in the net-lease space. The company has a strong portfolio of high-quality properties filled with strong tenants such as Walgreens, Home Depot, FedEx, Walmart, and CVS to name a few. Even during the pandemic, the company has a 98.6% occupancy rate and is collecting nearly 100% of normal rent as of the most recent month.
3. W.P. Carey Inc. (WPC)
Stock Price: $66.37
Market Cap: $11.7 Billion
1-Yr Performance: -16.7%
Dividend Yield: 6.3%
2021 Estimated Sales: $1.2 Billion
Let’s continue on the net-lease parade, and if you cannot tell already, I am very high on the net-lease sector. WPC has increased their dividend 22 consecutive years and maintains a very strong balance sheet. WPC is trading at a great valuation currently, one that I will be looking to take advantage of sooner rather than later. This REIT, similar to Realty Income, has also maintained a strong occupancy rate with the latest update having their occupancy at 98.9%. WPC is a little more diversified than the other two net-lease REITs mentioned above, as some of their top tenants include Uhaul, Extra Space Storage, and Marriott.
4. Iron Mountain Incorporated (IRM)
Stock Price: $28.00
Market Cap: $8.2 Billion
1-Yr Performance: -7.8%
Dividend Yield: 8.7%
2021 Estimated Sales: $4.3 Billion
Iron Mountain is one of my favorite REIT holdings in my current portfolio. The Iron Mountain you may be thinking of is the shredding company or filing company, and if you did think that, you are correct. That is a major part of the business, but the company has been going through a transformation now for a little while and building a segment of Data Centers. Data Center REITs have performed quite well over the past year, but IRM is still not getting that boost as their DC segment is still rather small, but growing at a solid clip. This is a long-term holding for me.
5. Medical Property Trust, Inc. (MPW)
Stock Price: $20.85
Market Cap: $12.1 Billion
1-Yr Performance: 0.7%
Dividend Yield: 5.1%
2021 Estimated Sales: $1.4 Billion
Medical Property Trust is the owner of Hospitals. They have operators that lease from them and in case you have been living under a box over the past year, hospitals are jam packed. The government has essentially backed hospital operators, which is a big reason MPW has been collecting 100% of rents each month since the pandemic started.
6. Federal Realty Investment Trust (FRT)
Stock Price: $82.58
Market Cap: $6.5 Billion
1-Yr Performance: -32.8%
Dividend Yield: 5.0%
2021 Estimated Sales: $874.4 Million
Federal Realty Trust is a shopping center REIT. The company is a leader in the space with a high-quality portfolio of properties and a solid balance sheet. The company is a Dividend King, meaning they have paid and raised their dividend every year for more than 50 years. When I say the company has a solid balance sheet, I am not joking as it is backed up by their A- rating from Standard & Poor’s. During this pandemic, a lot of companies are struggling, but someone like FRT with no liquidity issues have the opportunity to acquire more assets at a discount if they so choose. The company is currently trading at a cheap valuation as compared to their historical results.
7. Digital Realty Trust, Inc. (DLR)
Stock Price: $131.27
Market Cap: $38.5 Billion
1-Yr Performance: 12.5%
Dividend Yield: 3.4%
2021 Estimated Sales: $4.3 Billion
As I mentioned above within the Iron Mountain summary, Data Centers have performed quite well over the past year. The reason for this is largely due to the COVID-19 pandemic accelerating the need for businesses to add more Data Center space. Many businesses are still working from home with some choosing to make many positions permanently WFH, and with many businesses looking to move more things digital, data must be secure and saved in Data Centers, and DLR is one of the largest and most well-run DC REITs in the country.
8. Crown Castle International Corp (CCI)
Stock Price: $153.06
Market Cap: $66.5 Billion
1-Yr Performance: 10.5%
Dividend Yield: 3.5%
2021 Estimated Sales: $6.2 Billion
Data Centers is one area that has been hot of late, but another area that is poised to continue seeing growth is 5G. 5G continues to rollout in the US and across the globe and if you are not familiar with 5G, it is a much faster wireless network, but one thing that it requires is new towers or the need for more towers as the signal is said to not cover as much ground as 4G. This is great for the likes of AMT and CCI. I actually like both, but selected CCI, due to it having a better valuation and expected growth.
9. STAG Industrial, Inc. (STAG)
Stock Price: $30.36
Market Cap: $4.6 Billion
1-Yr Performance: -3.5%
Dividend Yield: 4.7%
2021 Estimated Sales: $524.5 Million
STAG is a REIT focused on Industrial properties, and with the boom in e-commerce, this is a great space to be in currently. Yet again, this is another REIT with a high-quality balance sheet, which is very important, especially for REITs as cash is so precious. The company’s largest tenant is Amazon, which accounts for nearly 3% of total revenues, so the tenant mix is pretty diversified. Similar to Realty Income, STAG also pays a monthly dividend. STAG is trading at a pretty fair valuation, not cheap by any means, but they are in an industry that is expected to grow at a strong clip in the coming years.
10. AvalonBay Communities, Inc. (AVB)
Stock Price: $157.38
Market Cap: $22.1 Billion
1-Yr Performance: -23.0%
Dividend Yield: 4.0%
2021 Estimated Sales: $2.3 Billion
The final REIT I will discuss with you today comes by way of an Apartment REIT, AvalonBay Communities. AVB is focused on both the east coast and west coast and has been through a tough year as the pandemic and work from home conditions have seen many moving out of big cities and moving more to urban areas. The thing about AVB is they have a high-quality portfolio and tenants tend to be more wealthy and young individuals looking to work and live in metropolitan areas. The narrative that metro areas are losing there luster is not one I buy into, which is why I bought AVB on the dip and hold them in my portfolio. As the economy opens up yet again, and a sense of normalcy returns, AVB shares I would expect to return moving in the right direction again.
Stay safe and happy investing!
Disclaimer: I currently have positions in O, STOR, AVB, IRM, MPW