Top 6 REITs to Invest in 2023
For a typical person, purchasing a real investment property can be challenging and expensive. A real estate investment trust, or REIT, is a publicly traded firm that invests in real estate and is a fantastic substitute.
Investors that use real estate investment trusts (REITs) can protect their portfolios from rising inflation.
The value of real estate owned by REITs rises with inflation. Furthermore, real estate investment trusts usually include provisions in their contracts that allow for recurring rent hikes. As a result, most of the top REITs in 2023 will probably be those whose rent increases correlate with the consumer price index (CPI), enabling their income to keep pace with hot inflation.
Top Six REITs To Invest In The Year 2023
Claros Mortgage Trust Inc.
Dividend yield: 7.9%
A real estate investment trust called Claros specializes in mortgages. This approximately $3 billion REIT concentrates mostly on commercial real estate loans in significant U.S. cities as opposed to residential mortgages, unlike several other companies in the mortgage sector. It also emphasizes “senior” debt, which is higher on the priority list and more likely to be paid off first if the borrower runs into trouble.
Thanks to its good performance, Wells Fargo recently reaffirmed its “overweight” rating, and CMTG is actually in the black since January 1 despite recent turbulence elsewhere in the stock market. Although the COVID-19 pandemic has impacted commercial real estate, CMTG is still handsomely profitable and is a great option, too, for long-term investment.
Rexford Industrial Realty
Dividend yield: 2.2%
Rexford Industrial Realty is a rapidly growing industrial warehouse REIT. Despite persistent supply-chain problems, REXR may be among the top REITs for the remainder of 2022. Rexford owns more than 60% of the industrial real estate close to the ports of Los Angeles and Long Beach. The vast $31.6 billion Southern California industrial market, which is larger than the next five largest U.S. industrial markets combined, is the only one that the company can access.
Rents are rapidly increasing, and Rexford has excellent pricing power because of its presence in Southern California. As a result, the REIT has experienced an average annual increase in dividends of 18% over the previous five years and FFO (a REIT earnings metric) per share of 14%.
Currently, 312 buildings totaling 38.1 million square feet of leasable space make up Rexford’s portfolio. During the March quarter, the company purchased 17 new properties totaling 1.5 million square feet of rentable space.
Rexford raised its forecast for 2022 and anticipates core FFO per share growth of 13% at the midpoint of the forecast, up from its previous 9% growth. Additionally, the REIT rewarded investors with a generous 31% dividend increase earlier this year.
Digital Realty Trust Inc. (DLR)
Dividend yield: 3.7%
DLR is a distinctive REIT with a tech focus that specializes in offering space to house cutting-edge data centers. Since the hardware still needs to be stored somewhere, even though it’s all the rage for businesses to offload their servers to the “cloud,” Digital Realty is one of the top providers of that actual server space. It provides services to about 4,300 clients, including some of the biggest companies in the world, through more than 290 high-performance data centers present worldwide.
DLR has admittedly seen some difficulties in 2022 due to greater challenges for the IT industry. Still, it currently pays double the dividends of the S&P 500 and maybe a wonderful long-term investment, given that the megatrend of data storage is not going away anytime soon.
Global Self Storage (SELF)
Dividend Yield: 4.2%
Global Self Storage (NASDAQ: SELF)stock’s yield as of June 13 was 4.2%, which indicates that its 26-cent dividend represents 4.2% of its $5.94 stock price. In both 2022 and 2023, the company’s earnings will more than cover the dividend, and it is a self-storage company.
Analysts also predicted that its FFO in 2023 would be 38 cents per share. That will pay the company’s dividends in full. Self-storage facilities, which it leased to operators, turned out to be quite profitable.
As a result, this stock is among the more attractive REITs.
Store Capital (STOR)
Dividend Yield: 5.8%
Single-tenant operational real estate investment trust Store Capital (NYSE: STOR), with a market worth of $7 billion, is a sizable REIT. With more than 2,500 properties, the portfolio is well-diversified.
The corporation generated an adjusted FFO, or AFFO, of 57 cents per share. That is much more than its 38.5 cents per quarter payout, which equates to a $1.54 per share annual dividend yield.
Analysts expect its FFO to be $2.17 per share in 2022, significantly more than the $1.54 in dividends paid for the year. Analysts predict that AFFO will be $2.24 per share next year. Due to lease escalation clauses based on the CPI, the corporation is also shielded from the effects of inflation.
As a result, STOR Capital is among the top REIT stocks to consider investing in.
Rayonier Inc. (RYN)
Dividend yield: 3.0%
Rayonier is a major landowner with a real estate investment trust structure. Nearly 3 million acres of timberland are owned or leased by Rayonier in New Zealand, the Pacific Northwest, and the South of the United States. Because it is purchasing vast expanses of forest property rather than hospitals or office space, it is highly unique in the industry.
The underlying worth of Rayonier’s land is an excellent hedge against economic downturns in addition to pushing up the value of its timber due to commodity price inflation because there are no rent checks to negotiate with renters.
What types of REITs are there?
REITs are frequently divided into equity or mortgage categories. Equity REITs mainly own and manage a real estate that generates income. Mortgage REITs typically issue credit indirectly through purchasing loans or mortgage-backed securities, or directly to real estate owners and operators.
How do investors own REITs?
Investors can own REIT shares directly, indirectly, or through exchange-traded funds. In addition, a FINRA-registered broker can help investors buy shares of a publicly traded REIT.
How do REITs measure earnings?
The major operating performance indicator in the REIT sector is net income, as defined by GAAP. As an additional indicator of a REIT’s operational performance, the REIT sector employs funds from operations (FFO).