4 Best REITs For The Rest Of 2022 (2024)

REITs (real estate investment trusts) are still delivering roughly twice the income of the broader market. And that’s just the sector average.

Four highly profitable REITs in particular are yielding 4% and up today. We’ll discuss them in a moment.

Interest rates are rising, and “common wisdom” says it’s a bad time to buy REITs because they behave like bonds. Wrong.

As long as the economy keeps chugging along, and these specific rents are getting paid, then the dividends are going to continue being dished. Period. And we’re all about the dividends here at Contrarian Outlook.

S&P Global research notes that rising interest rates “are frequently associated with economic growth and rising inflation, which can indeed be a boon for the real estate sector. Specifically …

  • “Healthy economic growth tends to translate into greater demand for real estate and higher occupancy rates, supporting growth in REIT earnings, cash flow, and dividends.”
  • “In inflationary periods, real estate owners typically have the ability to increase rents, and REIT dividend growth has historically exceeded the rate of inflation as a result.”

While that’s encouraging from a broad-strokes perspective, we obviously only want the best of the best. Let’s dive into these generous dividend payers one at a time.

Realty Income O (O)


Dividend Yield: 4.0%

No surprise that Realty Income (O) headlines a list of high-quality REITs that are bouncing back with the market-at-large.

Realty Income has built its name on being a monthly dividend payer. As I write this, O boasts 625 consecutive monthly dividends, but of course, I expect that to change here in a few weeks… and every month after that. Moreover, it’s a Dividend Aristocrat that has upped the ante on its payout 116 times since coming public in 1994, including 98 consecutive quarterly increases.

It has provided that combination of dividend longevity and improvement thanks to a vast portfolio of more than 11,000 properties that, importantly, are under long-term net lease agreements. The “net lease” part is the key here. Realty Income doesn’t deal with insurance, it doesn’t mess with maintenance, and it doesn’t mess around with taxes—tenants are on the hook for all of that.

Realty Income just collects rent checks, then turns around and writes dividend checks.

The REIT is coming off a fantastic first quarter that saw revenues soar 82% and adjusted funds from operations (FFO, an important real estate profitability metric) jump 14% year-over-year. But importantly, Realty Income took a massive step outside of its comfort zone. O announced in February that it had agreed to buy Encore Boston Harbor Resort and Casino from Wynn Resorts WYNN (WYNN) for $1.7 billion under a long-term net lease agreement—if completed, that would be Realty Income’s first casino property.

This has long been a consistency-and-dividends pick with a yield (4%) that’s frequently above the REIT-sector average. But its newfound aggression puts the possibility of brisk growth in play, too.

National Retail Properties (NNN)

Dividend Yield: 4.6%

Realty Income’s success is hardly an outlier. Prior to the recent uptick, net-lease REITs were already the top-performing real estate industry year-to-date, down just more than 6% vs. an 18% decline for the FTSE NAR AR EIT All Equity Index, according to an early July note from Raymond James.

So you won’t be surprised when I tell you another net-lease REIT–National Retail Properties (NNN)–looks like a shining example in the space.

NNN isn’t quite as big as Realty Income, but it still has massive scale at roughly 3,300 properties leased out to 370 tenants across 48 states, and at a 99%-plus occupancy rate, no less. No tenant makes up more than 5% of the portfolio, and for those concerned about stability, some of these would survive an apocalypse: 7-Eleven, BJ’s Wholesale, Fikes.

That has fueled persistent growth in National Retail Properties’ dividend, which has improved annually for more than three decades. That includes a recent 3.8% raise to 55 cents per share quarterly.

Q2 earnings will be out soon, and the company hopes to build upon a strong first quarter that saw AFFO per share expand by 4% to 79 cents per share. Meanwhile, the company should see full-year AFFO push forward by more than 6%, says Raymond James. It’s an exhibition of solidity: Something that, combined with a 4%-plus yield, should entice plenty more investors throughout the rest of the year, especially if the market starts to wobble again.

Gaming & Leisure Properties (GLPI) & VICI Properties (VICI)

GLPI Dividend Yield: 5.4%

VICI Dividend Yield: 4.2%

Also worth a deeper look are two acquisitive casino names: Gaming & Leisure Properties (GLPI) and VICI Properties (VICI).

The former came to life in November 2013 when it was spun out from Penn National Gaming PENN (PENN). And while casinos might make you think of Las Vegas, none of GLPI’s 55 gaming and related facilities are located in Sin City—and indeed, just three are within Nevada. The other 52 are spread out across 16 states, including Ohio, Maine and Louisiana.

VICI—also a spinoff, from Caesars Entertainment CZR (CZR)—does boast several iconic Vegas spots, including Caesars Palace, Mandalay Bay, MGM Grand and The Venetian. But again, most of its portfolio is regional, spanning Indiana, Mississippi and Massachusetts.

Pure-play gaming operators have struggled mightily since the start of the COVID bear market, with the likes of Las Vegas Sands (LVS) and Wynn Resorts (WYNN) still worth roughly half what they were a couple years ago. But you wouldn’t know that to look at GLPI and VICI, which are splashing cash and living large.

Gaming & Leisure Properties, for instance, recently announced it would purchase two Bally’s properties—Bally’s Twin River Lincoln Casino and Bally’s Tiverton Casino & Hotel—for $1 billion, with a contingency plan to buy Biloxi’s Hard Rock Hotel & Casino if they can’t close on the Lincoln casino on time. (And even then, they’ll still have an option until the end of 2024 to buy Lincoln.) Raymond James notes that the deal should be immediately accretive to AFFO, giving the gaming player a growthy jolt in the arm to go with its 5%-plus yield.

VICI Properties, meanwhile, closed on its previously announced buyout of MGM Growth Properties (MGP) in April, which the company says made it America’s largest owner of hotel and conference real estate. But it’s hardly done firing off capital. The company is providing loans toward developing Great Wolf Resorts properties and building future BigShots golf properties. And it can afford it. Like many REITs, many of VICI’s leases include rent bumps, and RJ notes that a little less than half of its rent will enjoy CPI-linked bumps this year, which “should push VICI’s internal growth to be among the highest in net-lease.”

So you have a pair of income-minded plays that both have substantial growth potential. But what about the cash?

From a dividend-growth perspective, VICI is head-and-shoulders the better option. But I think we can—and should—do better than the above-average 4% or so that the gaming name offers.

Brett Owens is chief investment strategist for Contrarian Outlook. For more great income ideas, get your free copy his latest special report: Your Early Retirement Portfolio: Huge Dividends—Every Month—Forever.

Disclosure: none

I'm an experienced financial analyst with a deep understanding of real estate investment trusts (REITs). I've been actively involved in analyzing and studying the dynamics of the real estate market, particularly focusing on REITs and their performance in various economic conditions. My expertise extends to evaluating dividend-paying stocks and assessing the impact of economic factors, such as interest rates, on investment decisions.

Now, let's delve into the concepts discussed in the article about REITs and their profitability:

1. REIT Income Outperforming the Broader Market:

The article highlights that REITs are currently delivering approximately twice the income of the broader market. This indicates a strong performance within the real estate sector, making it an attractive option for income-seeking investors.

2. Impact of Rising Interest Rates on REITs:

The article challenges the common belief that rising interest rates are a deterrent for investing in REITs, stating that, in fact, they can be beneficial. According to S&P Global research, rising interest rates are associated with economic growth and inflation, which can positively impact the real estate sector. This is attributed to increased demand for real estate, leading to higher occupancy rates and growth in REIT earnings, cash flow, and dividends.

3. Realty Income (O):

  • Dividend Yield: 4.0%
  • Realty Income is highlighted as a high-quality REIT known for being a monthly dividend payer. It has a remarkable track record of 625 consecutive monthly dividends and is recognized as a Dividend Aristocrat.
  • The REIT's strategy involves long-term net lease agreements for its extensive portfolio of over 11,000 properties, providing stability and consistent income.

4. National Retail Properties (NNN):

  • Dividend Yield: 4.6%
  • National Retail Properties is mentioned as another successful net-lease REIT with a portfolio of approximately 3,300 properties leased to 370 tenants across 48 states.
  • The REIT boasts a high occupancy rate of over 99% and has a history of annual dividend growth for more than three decades.

5. Gaming & Leisure Properties (GLPI) and VICI Properties (VICI):

  • GLPI Dividend Yield: 5.4%
  • VICI Dividend Yield: 4.2%
  • These two REITs are highlighted as acquisitive casino names with substantial growth potential.
  • GLPI is noted for its diverse portfolio of gaming facilities across 16 states, while VICI, having acquired MGM Growth Properties, becomes the largest owner of hotel and conference real estate in the U.S.

6. Dividend Growth Perspective:

  • VICI is presented as a better option for dividend growth compared to GLPI. The article suggests exploring opportunities beyond the average 4% yield offered by gaming REITs.

In conclusion, the article provides insights into the performance and potential of selected REITs, emphasizing their ability to deliver income even in the face of rising interest rates. These insights are valuable for investors seeking stable and dividend-paying opportunities in the real estate market.

4 Best REITs For The Rest Of 2022 (2024)


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