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Top 5 REITs For 2022: Invest with Confidence and Earn Passive Income

CEO Khai Intela
Image Source: Kwarkot/iStock via Getty Images An Introduction to REITs Are you looking for a reliable investment that offers a steady stream of income while also providing potential capital appreciation? Look no further than Real...

Concept image of Business Acronym REIT as Real Estate Investment Trust. 3d rendering Image Source: Kwarkot/iStock via Getty Images

An Introduction to REITs

Are you looking for a reliable investment that offers a steady stream of income while also providing potential capital appreciation? Look no further than Real Estate Investment Trusts (REITs). As the third-largest asset class in the United States, REITs offer a diverse range of real estate assets and serve as an attractive investment vehicle.

Historically, REITs have offered numerous benefits to investors:

  • Dividend Benefits and Inflation Protection: REITs provide an income stream that is significantly higher than bonds, making them a great hedge against rising inflation.
  • Competitive Long-Term Performance: REITs have delivered returns similar to stocks and outperformed bonds. In the current low-yield environment, the higher yields offered by REITs make them an attractive investment option.
  • Portfolio Diversification: Investing in REITs allows access to the real estate market, offering increased portfolio diversification and potentially higher returns without taking on additional risk.
  • Liquidity: REITs are traded on major stock exchanges, providing instant access to your money. Unlike bonds, which depend on supply and demand, REITs offer attractive return potential in both low- and high-inflation environments.

REIT chart Image Source: Why invest in Real Estate Investment Trusts (REITs)?

How Do REITs Perform In An Inflationary Environment?

With concerns about rising inflation, many investors are exploring alternative investments that can provide protection. Our current market environment, coupled with the uncertainty brought on by the pandemic, has made REITs an attractive option. REITs have historically performed well during periods of unexpected inflation and offer a total return investment with certain tax advantages.

REITs pool investor capital to own, operate, or finance income-generating real estate. One of the leading REITs in terms of assets under management is American Tower Corporation (AMT).

American Tower Corporation Is Overvalued

American Tower Corporation (AMT) is the largest REIT in the market, primarily operating in the wireless and broadcast infrastructure space. While it offers a solid growth outlook and dependable dividend stream, the valuation of AMT is relatively expensive compared to other recommended REITs.

AMT VALUATION Image Source: Seeking Alpha Premium

Although AMT's growth and profitability metrics are promising, we believe there are more attractively priced REITs available. Consider exploring our list of Top REITs for 2022, where we've sorted them by quant and yield ranking.

Top Quant REITs Sorted By Yield Image Source: Seeking Alpha Premium

Why Should You Consider These Five REITs?

Let's delve into the five REITs that we believe have strong investment characteristics, excellent profitability, and substantial growth potential. These REITs are well-positioned to benefit from economic growth, demographics, and consumer spending – all vital factors that drive REIT prices.

Agree Realty Corporation

Agree Realty Corporation (NYSE: ADC) is a net-lease REIT primarily focused on acquiring and developing assets leased to retail clients. It operates under a net lease structure, where the lessee covers property fees in addition to rent. ADC offers a B- Valuation Grade, a strong dividend yield, and attractive valuation ratios compared to the sector.

ADC VALUATION Image Source: Seeking Alpha Premium

With a quality portfolio and solid fundamentals, ADC is attractively priced. Investment experts and fellow Seeking Alpha author Austin Rogers also consider ADC a best-in-class REIT, highlighting various factors, such as rising investment grade tenant exposure, a growing ground lease portfolio, and a monthly dividend payout.

STAG Industrial, Inc.

A leader in environmental, social, and governance (ESG) practices, STAG Industrial, Inc. (NYSE: STAG) focuses on acquiring and operating single-tenant industrial properties. With an enterprise value of $8.7 billion and properties in 40 states, STAG is known for its attractive valuation compared to other industrial REITs.

STAG GROWTH Image Source: Seeking Alpha Premium

STAG's goal is to strike a balance between income and growth. Its impressive growth and profitability metrics, coupled with positive Q3 results and high demand for rental spaces, make STAG an appealing investment choice.

Regency Centers Corporation

Regency Centers Corporation (NASDAQ: REG) is a Jacksonville-based REIT and one of the largest shopping center operators. As economies recover and retailers bounce back, shopping center REITs like REG are experiencing near-full recovery. With a C+ Valuation Grade and attractive forward price-to-earnings ratio, REG is well-positioned for growth.

REG FACTOR GRADES Image Source: Seeking Alpha Premium

REG's strong Q3 results, which included a revenue rise of 21.5% YoY and an A- Revisions Grade, demonstrate its potential. With excellent liquidity, a sound balance sheet, and the ability to reinvest in existing centers, REG is a Buy for long-term growth and income.

Essential Properties Realty Trust, Inc.

Essential Properties Realty Trust, Inc. (NYSE: EPRT) owns, acquires, and manages single-tenant net-leased properties. EPRT focuses on middle-market companies in service- and experience-based sectors and boasts a 100% occupancy rate.

EPRT 1YR QUANT RATING HISTORY Image Source: Seeking Alpha Premium

Following an impressive Q3, EPRT raised its dividend by 4%. With strong business fundamentals, steady growth, and attractive valuation, EPRT is well-positioned for continued success.

Alpine Income Property Trust, Inc.

Alpine Income Property Trust, Inc. (NYSE: PINE) specializes in owning, acquiring, and operating high-quality single-tenant net-leased properties. PINE's strong Valuation Grade and impressive Q3 results make it an enticing investment opportunity.

PINE VALUATION Image Source: Seeking Alpha Premium

With a low AFFO multiple and steady growth, PINE offers investors a balance between income and potential capital appreciation.

Conclusion: Our Top REITs for 2022 Offer Excellent Value and Income Potential

As the popularity of REITs continues to grow, these five REITs provide great investment options. With solid yields, attractive valuations, and robust growth prospects, they are well-positioned to protect your portfolio against inflation while generating passive income.

In addition to these top picks, we have dozens more REITs, top financial stocks, and top energy stocks to help you inflation-proof your portfolio. Our investment research tools and resources can assist you in making informed decisions. Explore our Premium offerings for access to Quant Grades and screens.

Invest with confidence in these top REITs for 2022 and experience the benefits of passive income and portfolio diversification.