In this article, we discuss the 11 best REIT stocks to buy right now. If you want to skip our detailed analysis of REIT stocks, their history, performance, and outlook for future growth, go directly to 5 Best REIT Stocks To Buy Right Now.
Real estate investment trust (REIT) stocks are a good option for investors looking for stable income. REITs have to pay out at least 90% of their taxable income as dividends to shareholders in return for significant tax breaks. These companies pool resources to acquire real estate properties and use the recurring rent payments to pay dividends and fund future acquisitions or developments. When inflation hurts almost all sectors of the economy, REITs tend to perform better, since they can pass on the rise in cost to their tenants and receive larger rent payments. Point in case, the average yield for REITs was recorded at 2.9% at the end of 2021, more than twice the average yield of 1.3% for the S&P 500 index.
REITs were one of the best-performing sectors of the economy in 2021, where the Dow Jones Equity All REIT index posted returns of 41.2%, as compared to the 28.7% returns posted by the S&P 500. This trend seems set to continue in 2022, as a growing US economy will increase occupancy rates and rents for residential, industrial, and commercial properties. Office leasing is already on the up as offices start opening again after the pandemic lockdowns.
Therefore, it would be a wise bet for investors to go for REITs that can offer stable dividend payments along with moderate long-term growth that often stands to benefit from inflation. Investors should also mix up and diversify their portfolios by opting for large-cap stocks such as Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN).
Let’s now take a look at the 11 best REIT stocks to buy right now.
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Our Methodology
We examined all the publicly listed REIT stocks in the US and picked the ones with the best outlook for 2022. We also looked for solid fundamentals, positive analyst ratings, and upcoming growth potential. Hedge fund sentiment around each stock has also been mentioned to give readers context for their investment decisions and has been derived from Insider Monkey’s database of 924 elite hedge funds.
11 Best REIT Stocks To Buy Right Now
11. UMH Properties, Inc. (NYSE:UMH)
Number of Hedge Fund Holders: 6
UMH Properties, Inc. (NYSE:UMH) is a real estate investment trust which is the leading manager of manufactured home communities across the United States, with more than 24,000 home sites across 127 communities. The firm enjoys a portfolio of around 9,000 rental homes, and has plans to increase this number by 800 to 900 homes every year. As home prices go up, UMH Properties, Inc. (NYSE:UMH) is expected to benefit as first-time homeowners choose the more affordable option of manufactured homes. As of March 31, shares of UMH Properties, Inc. (NYSE:UMH) have gained 25.84% in the last year, and 5.09% in the last 6 months.
Wedbush analyst Henry Coffey added UMH Properties, Inc. (NYSE:UMH) to his firm’s ‘Best Ideas List’ on January 20. He noted the firm’s ability to generate annualized free funds flow (FFO) over the next 3-4 years which is almost double that of housing REIT competitors, and 2.8 times the expected levels generated by the typical multifamily REITs. He sees this growth being driven by three factors: expected gains in capital efficiency, continued expansion of both rented sites and new communities, and annualized growth in existing rental sites by 3-4% per year. The analyst gave UMH Properties, Inc. (NYSE:UMH) an ‘Outperform’ rating and a price target of $27.50.
As of the fourth quarter, 6 out of 924 elite hedge funds tracked by Insider Monkey held stakes in UMH Properties, Inc. (NYSE:UMH), with a combined worth of $32.36 million. Millennium Management of Israel Englander was the leading shareholder in the firm during Q4 2021, with roughly 544,000 shares valued at $14.86 million.
In addition to Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN); UMH Properties, Inc. (NYSE:UMH) is one of the top stocks to buy now.
10. PennyMac Mortgage Investment Trust (NYSE:PMT)
Number of Hedge Fund Holders: 11
PennyMac Mortgage Investment Trust (NYSE:PMT) is next up on our list of the best REIT stocks to buy now. It is a California-based specialty finance and real estate investment trust, which primarily invests in mortgage-related assets and credit risk transfer (CRT) agreements.
On February 8, B. Riley analyst Matt Howlett maintained a ‘Buy’ rating on PennyMac Mortgage Investment Trust (NYSE:PMT) shares, noting that investors can take advantage of a unique opportunity to acquire one of the leading mortgage REIT business models, which is now trading at 0.85 times its book value. Howlett lowered his firm’s price target on PennyMac Mortgage Investment Trust (NYSE:PMT) to $21 from $22.
Out of all the hedge funds tracked by Insider Monkey in the fourth quarter of 2021, 11 held stakes in PennyMac Mortgage Investment Trust (NYSE:PMT) with a total value of $20.89 million. This is up from 10 hedge funds in the preceding quarter. Balyasny Asset Management was the top shareholder of the firm in the fourth quarter, with roughly 540,000 shares worth $9.35 million.
PennyMac Mortgage Investment Trust (NYSE:PMT) also pays a solid dividend yield of 11.13% as of March 31. The firm declared a quarterly dividend of $0.47 per share on March 4, which was in-line with previous.
9. Iron Mountain Incorporated (NYSE:IRM)
Number of Hedge Fund Holders: 13
Iron Mountain Incorporated (NYSE:IRM) deals in the storage of data, both in the physical and digital form. It stores sensitive data for companies with its record storage facilities, and operates a number of data centers that offer information management services. It is the global leader in its space serving roughly 225,000 companies around the world, including almost 95% of all Fortune 1000 companies. Iron Mountain Incorporated (NYSE:IRM) operates a real estate network of approximately 90 million square feet across roughly 1,500 facilities in 50 countries around the globe.
On February 25, Stifel analyst Shlomo Rosenbaum upgraded Iron Mountain Incorporated (NYSE:IRM) to ‘Buy’ from ‘Hold’, and upped the price target to $52 from $49. The analyst believes the firm has achieved a sustainable organic growth trajectory of 4-6%, and sees the stock as a ‘value play’ in the context of self storage and data center REITs.
13 hedge funds were long Iron Mountain Incorporated (NYSE:IRM) at the end of the fourth quarter, with combined positions worth $55.26 million. Billionaire Jim Simons’ Renaissance Technologies was the top shareholder of the firm in Q4 2021, with almost 358,000 shares worth $18.71 million.
Iron Mountain Incorporated (NYSE:IRM) posted a revenue of $1.16 billion in the fourth quarter, showing an increase of 9.43% year-on-year and beating estimates by $12.61 million. As of April 1, shares of the firm have gained 48.58% in the last year, and 26.04% in the last 6 months.
8. Plymouth Industrial REIT, Inc. (NYSE:PLYM)
Number of Hedge Fund Holders: 13
Plymouth Industrial REIT, Inc. (NYSE:PLYM) is a real estate investment trust that focuses on the acquisition and operation of industrial properties, distribution centers, and warehouses across logistical corridors in the United States.
On March 2, B. Riley analyst Bryan Maher resumed coverage of Plymouth Industrial REIT, Inc. (NYSE:PLYM) with a ‘Buy’ rating and $32 price target. The firm completed $194.5 million in acquisitions in the fourth quarter, and according to the analyst, is a differentiated industrial REIT with an ‘abnormal’ acquisition style and 10 development projects currently underway. Truist analyst Anthony Hau also has a ‘Buy’ rating on Plymouth Industrial REIT, Inc. (NYSE:PLYM) shares, and noted that the REIT has tripled the size of its portfolio since its IPO and improved the stock’s liquidity by raising equity at a high cost.
He sees improved cost of capital, ‘rising tides’ in the sector, and uplift from Covid recovery leading to increased cash flow per share for the firm in 2022. In March, Plymouth Industrial REIT, Inc. (NYSE:PLYM) purchased Madison International Realty’s 80% interest in Plymouth MIR JV LLC, which is a joint venture formed in December 2020 to acquire a portfolio of industrial buildings in metropolitan Memphis, Tennessee.
Investor confidence was up on Plymouth Industrial REIT, Inc. (NYSE:PLYM) in the fourth quarter, where 13 hedge funds were bullish on the company shares, as compared to 11 hedge funds in the preceding quarter. Two Sigma Advisors held 340,000 shares of Plymouth Industrial REIT, Inc. (NYSE:PLYM) in the fourth quarter at a value of $10.89 million, making it the top shareholder of the firm. In February, Plymouth Industrial REIT, Inc. (NYSE:PLYM) declared a $0.22 per share quarterly dividend, which is a 4.8% increase from its prior dividend of $0.21. It pays a dividend yield of 3.27% as of April 1.
7. Americold Realty Trust (NYSE:COLD)
Number of Hedge Fund Holders: 16
Americold Realty Trust (NYSE:COLD) is a real estate investment trust which operates temperature-controlled warehouses. It commands a 22% share of the cold storage market in the US, operating 246 cold storage warehouses that serve customers such as Walmart and Kraft Heinz.
Evercore ISI analyst Samir Khanal in January initiated coverage of Americold Realty Trust (NYSE:COLD) with an ‘Outperform’ rating and $34 price target, noting that the firm plays a ‘crucial role’ in the global food supply chain, and that some short term headwinds such as higher labor costs are already priced into the stock at current price levels. The firm is also expected to increase rents and re-negotiate lease contracts with its long-term customers in order to absorb the hike in labor costs. Truist analyst Ki Bin Kim also reiterated a ‘Buy’ rating on Americold Realty Trust (NYSE:COLD) in March, and lowered the price target to $34 from $36.
Out of all the hedge funds tracked by Insider Monkey, 16 hedge funds were long Americold Realty Trust (NYSE:COLD) holding combined stakes worth $263 million. Long Pond Capital was the leading shareholder of Americold Realty Trust (NYSE:COLD) in the fourth quarter, with a stake consisting of 3.92 million shares worth $128.70 million.
Baron Funds, an investment firm, talked about Americold Realty Trust (NYSE:COLD) in its Q3 2021 investor letter. Here’s what the fund said:
“Americold Realty Trust is one of the largest global owner/operators of cold storage warehouses. The stock fell as the company reported weak results for the third quarter in a row. The primary issue is that food producers are not able to produce enough to service customer demand and maintain inventory levels. It’s disappointing that this dynamic is now projected to persist, causing management to reduce guidance and lose face with investors. We think the long-term story and investment thesis remains intact, so are sticking with our position. The stock trades at a big discount to its private asset value.”
6. New Residential Investment Corp. (NYSE:NRZ)
Number of Hedge Funds: 19
New Residential Investment Corp. (NYSE:NRZ) is up next on our list of the best REIT stocks to buy right now. It invests in the residential housing sector, and its portfolio includes residential loans, mortgage servicing-related assets, residential mortgage-backed securities, and other related investments. The New York-based firm also operates a mortgage originator and servicer.
In the fourth quarter, New Residential Investment Corp. (NYSE:NRZ) posted an EPS of $0.40, beating estimates by $0.01. Quarterly revenue of $1.10 billion was also above analysts’ forecasts by $112.65 million, and an increase of 92.33% year-on-year.
On January 5, Piper Sandler analyst Kevin Barker kept an ‘Overweight’ rating on New Residential Investment Corp. (NYSE:NRZ) shares, and lowered the price target to $12 from $12.50. In March, the REIT partnered with digital media firm Patch to launch a mortgage resource hub. This multi-year partnership will work towards the establishment of an online hub which will serve as a depot for resources and news for anyone looking to buy or finance a house.
Investors were seen buying up on New Residential Investment Corp. (NYSE:NRZ) in the fourth quarter, with 19 hedge funds bullish on the company shares, as opposed to 16 hedge funds in the preceding quarter. Arrowstreet Capital upped its stake in New Residential Investment Corp. (NYSE:NRZ) by 73% in the fourth quarter, with 4 million shares worth $42.86 million making it the top shareholder of the firm.
Hedge funds are pouring into New Residential Investment Corp. (NYSE:NRZ); in addition to Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN).
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Disclosure. None. 11 Best REIT Stocks To Buy Right Now is originally published on Insider Monkey.
