Real estate stocks were the third-best sector this year but not all REITs produced returns. To make money on your real estate investments in 2022, you need to know which REIT stocks to buy. We bring you the five best REIT stocks to watch for in 2022.
If we look into the long term, Industrial real estate has been a top performer among commercial real estate over the past decade. It’s hard to argue that investing in real estate is one of the best ways to put your money to work for you. So, naturally, finding the best REITs to buy will help your portfolio to perform well in 2022 and beyond.
2022 is expected to see improvement in commercial real estate markets as the economy continues to recover from the Covid-19 pandemic. There are both upside and downside risks to the outlook.
Crown Castle International (CCI)
Crown Castle (CCI) is a key REIT player in the US market. CCI owns, operates, and leases more than 40,000 cell towers and approximately 80,000 route miles of fiber supporting small cells in the country.
CCI stock checks a lot of boxes. It’s a clear leader in a narrow niche that is global in scale and clearly essential. It has a good dividend history and prospects of long-term capital appreciation.
Investors in Crown Castle have already done very well, especially if you bought it as an IPO in 1998. Since then, it’s generated a total return of about 1,760%, more than thrice that of the S&P 500. However, looking at a shorter window Crown Castle offers a slightly better deal looking at its high-line metrics.
Crown Castle was yielding 3.13%, with an annual dividend totaling $5.32 based on Oct. 8. That’s a pretty good dividend yield as well as strong financials.
At the third quarter’s end, a total of 45 of the hedge funds tracked by Insider Monkey held long positions in CCI stock. Hedge funds have been in a bullish position in CCI over the last 25 quarters. That shows that it is a safe investment with good prospects. So, CCI is one of the best REIT stocks that you must follow in the next year.
Corporate Office Properties Trust (OFC)
Corporate Office Properties Trust (OFC) is a REIT that owns, manages, leases, develops, and selectively acquires office and data center properties. The company owns the majority of its portfolio in locations that support the US Government and its contractors.
OFC seems a perfect REIT for investment in 2022. The company is likely seeing its earnings outlook improve to a greater extent.
In the recent third quarter, the company came on top with its quarterly results. OFC came out with quarterly funds from operations of $0.57 per share, beating the Zacks Consensus Estimate of $0.56 per share.
Revenues for Corporate Office Properties were $174.64 million, beating the Zacks Consensus Estimate by 7.05%. This compares to year-ago revenues of $154.77 million. The company has topped consensus revenue estimates four times over the last four quarters. That’s a great sign heading into 2022.
It will be interesting to see how OFC’s estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus FFO estimate is $0.57 on $164.05 million in revenues for the coming quarter and $2.27 on $653.32 million in revenues for the current fiscal year.
With a current dividend yield of 3.94%, OFC recently declared its 96th consecutive common dividend. That seals the deal for OFC being the best REIT stock for investment in 2022.
CareTrust REIT Inc. (CTRE)
CareTrust REIT (CTRE) is a self-administered real estate investment trust engaged in the ownership, acquisition, development, and leasing of skilled nursing, seniors housing, and other healthcare-related properties. The REIT has a nationwide portfolio of long-term net-leased properties, and a growing portfolio of quality operators leasing them. The company is focusing on both external and organic growth opportunities across the United States.
If you prefer EPS growth as a key factor for a stock, CareTrust REIT has grown EPS by 17% per year over the last three years. That growth rate is fairly good, assuming the company can keep it up. In this year CTRE is expected to maintain an EPS growth of over 24%.
CareTrust REIT shareholders can take confidence from the fact that EBIT margins are up from 54% to 59%, and revenue is growing. During the third quarter, CTRE posted revenues of $48.61 million, surpassing the Zacks Consensus Estimate by 0.01%. This compares to year-ago revenues of $45.69 million. While, the quarterly funds from operations came in line with the Zacks Consensus Estimate, at $0.38 per share.
CareTrust REIT stock is one on the analyst’s radar for 2022. With a dividend yield of 4.68%, CTRE looks like one of the best REIT stock this year.
Medical Properties Trust (MPW)
Medical Properties Trust (MPW) is a self-advised real estate investment trust that acquires and develops net-leased hospital facilities. The company is also one of the world’s largest owners of hospitals with 431 facilities and roughly 43,000 licensed beds in nine countries.
We have seen the rent prices surge which will help MPW gain more revenues in the coming year. During the third quarter, the company posted revenues of $390.78 million, surpassing the Zacks Consensus Estimate by 1.19%. It is compared to year-ago revenues of $329.46 million. Medical Properties has topped consensus revenue estimates four times over the last four quarters, making it one the best REIT stock to buy right now.
While the FFO also came in line with the Zacks Consensus Estimate, at $0.44 per share.
Apart from the metrics, the company acquired an €18 million cancer treatment and diagnostics center near Porto. Succeeding that, MPW completed its previously announced $760 million sale-leaseback transaction for 18 inpatient behavioral health hospital facilities operated by Springstone.
With these developments and a couple of more notable advancements, MPW looks to perform well in the coming year. Analysts see MPW stock to have much upside considering its profit margins growth and a potential rise in FFO. MPW has a forward-paying dividend yield of 5.04% at the moment.
Apartment Income REIT Corp (AIRC)
Apartment Income REIT (AIRC) belongs to the real state in residential space. The rents are continuing to pop up and are expected to keep pace in 2022, catching up with the surge in home prices. The company is mainly focused on the ownership and management of quality apartment communities located in the largest metro areas in the US.
AIRC is comparatively a smaller company with 99 upscale communities in 12 states. The higher rents collected on higher-income properties, the larger cities, along a great management team make AIRC one of the most efficient REITs. The company has a nearly 72% margin on its net operating income. That made it lead the industry for over 17 quarters in a row.
During the third quarter, Apartment Income reported an increase to full-year Same-Store Revenue, NOI, and FFO guidance. The company reported average rents have rebounded to pre-COVID peaks by the first quarter. While AIRC pays its current dividend with a 3.3% yield. Now, that profitability means that shares are a bit expensive at 24.5 FFO. But those funds are expected to grow by 12% next year.
The company also enhanced its portfolio during the third quarter with expansion. AIRC used $382 million of sales proceeds plus $128 million of operating partnership units to acquire for $510 million a four-property portfolio in the Washington D.C. area. Apartment Income REIT Corp expects to generate higher returns during 2022.
AIRC currently trades around its 52-weeks high but with a lot of positive upbringings, it’s one of the best REIT stock to watch in 2022.