As someone who wants to protect your funds, you must be looking for investments that serve as protection against inflation. With due diligence, I can show you valuable assets to keep in your portfolio. One of those options is REITs or real estate investment trusts. What do you think happens when prices go up? Real estate rents and values follow suit. Therefore, REIT dividend growth and income are reliable and steady even during inflationary periods.
Let’s directly compare REIT dividend growth with inflation to see how they stack up. For the last twenty years, the dividend increase of REITs has outgrown inflation as measured using the consumer price index, CPI. Therefore, you can be sure that even against moderate levels of inflation, REIT yields offer reliable protection.
1 - Essential Properties Realty Trust, Inc
Essential Properties Realty Trust (NYSE: EPRT) engages in acquiring, owning, and managing properties. Their customers are usually middle-market companies who lease these properties in the long term. I discovered that most of these companies are in the services and experience sectors from my research. EPRT customers pay rental payments and pay taxes, fees, and maintenance costs of the properties. Some notable clientele in the company's books includes McDonald's, Taco Bell, Cinemark, and Circle K.
EPRT has a market capitalization of $3.22 billion and a dividend yield of 4.08%. Its investments for 2021 were worth $974 million, making it a record year for the company. According to Quant rankings, EPRT is ranked second in the industry. The earnings per share, EPS, was $0.24, about $0.04 above the consensus estimate for 2021. This company is a strong buy as the fundamentals are strong.
2 - Equity Residential
The stakes are in Equity Residential's favor right now. Surging inflation has made home prices jump. By the beginning of this year, the median sales price for a home was 17% above the price in January 2021. Increased interest rates might slow this trend, but the fall will not be far. So when people do not find enough homes that fit their budgets, Equity Residential (NYSE: EQR) becomes the solution they seek.
Equity Residential owns and leases apartment complexes. It currently has 307 properties with a combined total of 79 322 units. The demand for apartment buildings rises as home prices increase. Also, because more businesses are soon moving to rent offices, the need for apartments will further skyrocket.
EQR rents primarily to affluent people. Recently, it sold $1.02 billion worth of property with a median age of 30 years, moving the money to newer and fast-rising places like Austin, Denver, and Texas. Many investors like the company because the chairman, Sam Zell, is a legend in the industry and has created value. Its dividend yield is 2.8%. I personally like this yield percentage. A higher dividend yield slows the growth of the company.
Also, the market capitalization is $33.9 billion meaning there is still space for growth and room to double our investment in both the short and long term.
3 - Gladstone Land Corp.
Compared to the industry average of 2%, the dividend yield of Gladstone Land is 1.7%. However, you should not ignore this REIT. It is a rising start among REITs as its price shot up last year, and it still has more potential for increase.
Gladstone Land (NASDAQ: LAND) is in the business of leasing farmland to farmers. It has 108,000 acres of farmland across 14 states in 159 farms. Most of its farmlands are mainly for growing fruits and vegetables due to the lower storage costs of these commodities. The farmers pay most of the maintenance cost of the farms. Gladstone Land should see increased revenue this year for two reasons. Its land will become more valuable due to the global food crisis, and it will also have more income. So the potential is high. This investment has beaten the S&P 500 for several years.
Currently selling at 40.30 USD, this stock is in a bullish trend. It's been up 75% for the last 6 months.
Which of these REITs are you going to hold?