Real estate investment trusts (REITs) make it easier for investors to get exposure to real estate. These trusts hold onto several real estate properties and have affordable price points. You can get exposure to any REIT for $1 if you buy fractional shares. Also, investors can trade ETFs like the Vanguard Real Estate Index Fund ETF (NYSEARCA:VNQ) for a diversified portfolio of real estate trusts.
Investors tend to gravitate toward these stocks for the elevated dividend yields. It’s very easy to find REITs that have higher yields than the S&P 500, but those distributions all count as ordinary income. Some REITs outperform the market, yet they are more suitable for high-income investors. Additionally, REITs are less vulnerable to significant market corrections since these trusts hold onto tangible assets.
Wondering which REITs can generate income and returns for your portfolio? These are some of the best REITs to consider.
Stag Industrial (STAG)
Stag Industrial (NYSE:STAG) has a portfolio of industrial properties spread across the U.S. The company has tenants across its 570 properties in 41 states. Stag Industrial has a total of 113.0 million square feet of property.
The real estate investment trust delivered a 7.3% year-over-year (YOY) increase in core funds from operations in the first quarter. This metric came in at 59 cents per share. Stag Industrial also acquired a building for $50.1 million in the quarter with a cash capitalization rate of 6.1%. The company maintained a 97.7% occupancy rate within its total portfolio, indicating that most of its tenants are sticking around. This high retention rate also gives Stag Industrial the flexibility to raise prices in the future.
Stag Industrial offers a 4.10% yield and pays out monthly dividends. The stock also trades at a 36 P/E ratio. Gains haven’t been too impressive outside of the dividend, as the stock is only up by 18% over the past five years. The company’s significant real estate portfolio and high retention rates give it more insulation from volatility and economic cycles.
National Storage Affiliates Trust (NSA)
National Storage Affiliates Trust (NYSE:NSA) has self-storage real estate properties that make it easier for people to store everyday items. Tenants tend to stick around since most people need extra space to store everything. The company maintained an 85.9% occupancy rate in the first quarter. Core funds from operations came to $0.60 per share which was a slight YOY dip.
The REIT has a 21 P/E ratio and a generous 5.54% yield. National Storage Affiliates Trust is down by 5% year-to-date (YTD) but has gained 39% over the past five years. Also, the company issued a quarterly dividend of 56 cents per share. Net income increased by 135.4% YOY to reach $95.1 million in the quarter.
National Storage Affiliates Trust has reported high profit margins for several quarters. The firm closed out the first quarter with a 30.4% net profit margin. The company has many income streams and a high occupancy rate that suggests growth can remain strong.
Digital Realty Trust (DLR)
Digital Realty Trust (NYSE:DLR) is a leading data center firm that offers a 3.21% yield for its investors. Shares are up by 12% YTD as artificial intelligence (AI) tailwinds boost demand for the company’s services. Shares are also up by 26% over the past five years. Digital Realty Trust is still down by more than 10% from its all-time high.
The firm’s first quarter results showcased moderate growth. Core funds from operations per share inched higher from $1.66 in Q1 of 2023 to $1.67 in Q1 of 2024. Digital Realty Trust’s revenue was slightly down YOY. Remarks during the first quarter press release indicate that AI and cloud computing should drive more momentum.
“Digital Realty saw accelerating demand in the first quarter, executing on a number of multifaceted AI-oriented opportunities while continuing to support hybrid multi-cloud requirements. Strong demand supported a new leasing record, driven by large footprint deals,” said Andy Power, the company’s CEO.
On the date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.