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Mid-America Apartment Communities (MAA): Forecasts an impressive 13% growth in core funds from operations this year.
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Stag Industrial (STAG): Projects that the acquisition volume will likely reach $1.2 billion in 2022.
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W.P. Carey (WPC): Management is guiding AFFO per share growth of 4.2% YOY in 2022.
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Rising inflation, geopolitical tensions and increasing interest rates have many analysts worried about stagflation returning after almost half a century. As a result, real estate stocks have become a safe haven for income investors.
Housing shortages and record selling prices fuel demand and boost cash flow for real estate stocks. Higher yields, solid growth rates and strong profitability could bring tailwinds for shares in real estate investment trusts (REITs).
InvestorPlace.com readers will remember that REITs outperformed the broad stock market in 2021. The S&P 500 was up 27%, while REIT stocks rose roughly 46%. Despite declining 5.6% year-to-date (YTD), the Dow Jones Equity All REIT Capped Index has risen 17.8% over the past 12 months.
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Seasoned investors typically allocate a portion of their portfolio to real estate stocks as they pay significant dividends and generate a reliable source of income. In addition, they serve as effective inflation hedges. Cash flows derived from rents are often tied to the consumer price index (CPI) via legally enforceable lease agreements.
With that information, here are three REITs to buy that promise generous returns to income investors in 2022:
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Mid-America Apartment Communities |
$213.15 |
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STAG Industrial, Inc. |
$41.85 |
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W. P. Carey Inc. |
$86.08 |
Real Estate Stocks: Mid-America Apartment Communities (MAA)
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Our first real estate stock of the day is Mid-America Apartment Communities (NYSE:MAA), a residential REIT. It owns multifamily properties primarily located in the Southeastern and Southwestern U.S.
Mid-America Apartment released fourth-quarter (Q4) 2021 results on Feb. 2. Revenue increased 9.4% year-over-year (YOY) to $464 million. Adjusted funds from operations (AFFO) per diluted share came in at $1.74 compared with $1.47 in the prior-year period. Cash and equivalents ended the period at $1.1 billion.
The REIT ended 2021 with an occupancy of almost 96%. The average rent hike was around 10%, while Q4 net operating income increased by 12.1%. Mid-America Apartment Communities boasts more than $850 million of active projects under development, which management predicts could reach $1.2 billion this year.
MAA stock has appreciated 34% over the past year. Long-term investors will be interested to know that the price currently supports a 2% dividend yield.
Meanwhile, shares are trading at 14.3 times trailing sales. The 12-month median price forecast for MAA stock stands at $223.50.
Stag Industrial (STAG)
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Next up, we have Stag Industrial (NYSE:STAG), a REIT focused on single-tenant industrial real estates, such as warehouses, logistics and industrial properties. E-commerce-related properties account for around 40% of the portfolio.
Stag Industrial released Q4 results on Feb. 16. Revenue increased 13% YOY to $148 million. The REIT grew funds from operations (FFO) by 19% YOY. Core FFO per diluted share increased 4% YOY to 51 cents. Cash and equivalents ended the year at $23 million.
Roughly 97% of Stag’s rentable space is currently occupied. This REIT is well-diversified, as no single industry contributes to more than 11% of STAG’s total revenue. Amazon.com (NASDAQ:AMZN) is Stag’s largest customer, yet it still accounts for only 3% of its overall business.
STAG stock has increased 13% over the past year. Buy-and-hold investors can also enjoy an attractive 3.46% dividend yield. Shares are trading at 11.7 times trailing sales and the 12-month median price forecast for STAG stock is at $47.
Read Estate Stocks: W.P. Carey (WPC)
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Today’s final real estate stock is W. P. Carey (NYSE:WPC), a globally diversified net-lease REIT focused on commercial real estate, such as office, industrial, warehouse and retail space. This REIT boasts an impressive $18 billion real estate portfolio.
W. P. Carey released Q4 results on Feb. 11. Revenue increased 22% YOY to $375 million. AFFO per diluted share came in at $1.30, up 8% YOY from $1.20 in the prior-year period. Cash and equivalents ended the year at $165.4 million.
Around 60% of its leases include rate hikes contractually tied to the CPI, protecting against rising inflation. In addition, the average remaining lease term for its portfolio is over ten years, offering extra safety during economic downturns.
WPC stock has risen 17% over the past year. Readers may be interested to know that the REIT is set to become a Dividend Aristocrat in 2023. The stock price currently generates a generous 4.93% dividend yield.
Shares are trading at 11.4 times trailing sales. Finally, the 12-month median price forecast for WPC stock stands at $88.
On the date of publication, Tezcan Gecgil 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.
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