In this article, we discuss 12 best REIT dividend stocks to buy for 2024. You can skip our detailed analysis of the real estate investment trust (REIT) sector and its performance over the years, and go directly to read 5 Best REIT Dividend Stocks To Buy for 2024.
The real estate investment trust (REIT) in the US is an important component of the real estate market and the broader financial landscape. The sector has experienced substantial growth over the years. As per Ernst & Young's findings, publicly traded REITs have witnessed a remarkable compound annual growth rate of around 16.8% from the close of 1990. During this period, their collective equity market capitalization surged from $9 billion to nearly $1.27 trillion by the end of 2022. In addition to this, REITs in the US oversee a total of $4.5 trillion worth of real estate assets globally as of September 2023, according to CNBC.
The contribution of the REIT sector to the US economy stands unmatched. Through its diverse activities including operations, dividend income, interest payments, and construction projects, the sector has played a significant role in fostering economic growth. In particular, these activities have contributed a substantial $262.9 billion in labor income to the economy in 2022. Following a lackluster performance in 2022, the past year showed some improvement for the REIT sector, with positive returns recorded. The index tracks the performance of publicly traded REITs headquartered in the US. While the sector didn't outperform the broader market, the S&P United States REIT Index managed to achieve a total return of 13.77% over the year. That said, the REIT stocks experienced a significant surge, surpassing the performance of the overall market during the fourth quarter of 2023. The Dow Jones Equity All REIT Index concluded the quarter with an impressive total return of 17.9%, whereas the S&P 500 recorded a return of 11.7% for the same period.
In addition to delivering strong returns, the REIT sector also experienced notable growth in capital market activity last year, marking a significant uptick from 2022. According to data from S&P Global Market Intelligence, the industry successfully raised a total of $58.27 billion, reflecting a robust increase of 13.5% compared to the $51.36 billion raised in 2022. This surge in capital raising underscores the sector's resilience and attractiveness to investors amidst evolving market conditions. The report also mentioned that the majority of the capital raised by REITs stemmed from debt offerings, totaling $44.87 billion.
REIT stocks are gaining popularity among Americans, largely due to the sector's positive performance. A report by Nareit indicated that by the end of 2023, approximately 168 million Americans, representing about 50% of US households, had invested in REIT stocks. REIT investors have historically expressed concerns about the impact of rising interest rates on the sector's performance. This is primarily because higher interest rates tend to lower property values and increase borrowing costs for REITs. Additionally, as interest rates rise, the relatively high dividend yields offered by REITs become less appealing compared to lower-risk fixed-income securities, reducing their attractiveness to income-oriented investors. However, historical data suggests that the performance of REIT stocks during periods of high-interest rates may not be as dire as commonly feared. According to a report by S&P Dow Jones Indices, since the early 1970s, there have been six significant periods of rising 10-year U.S. Treasury Bond yields. In four of these periods, US REITs delivered positive total returns, with half of them even outperforming the S&P 500 index. In one instance, both US REITs and the S&P 500 exhibited nearly identical performances, while in only two instances the S&P 500 outperformed US REITs.
Considering their past performance, analysts have presented a positive outlook for the REIT sector in 2024. As mentioned above, the capital market activity within the sector has significantly grown last year, which would positively impact the sector’s productivity this year. Furthermore, Nareit noted that the REIT sector has shown superior performance compared to both private real estate and equities during periods following interest rate hikes. Given that the Federal Reserve is either at or nearing the conclusion of its interest rate hike cycle, this is promising for the outlook of REIT performance in 2024. In this article, we will take a look at some of the best dividend stocks from the REIT sector.
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Our Methodology:
For this list, we scanned Insider Monkey's database of 933 hedge funds as of Q4 2023 and picked REIT companies that pay regular dividends to shareholders. Next, we narrowed down 12 companies that are popular among elite funds at the end of Q4 and ranked them in ascending order of the number of funds that have stakes in them. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
12. Universal Health Realty Income Trust (NYSE:UHT)
Number of Hedge Fund Holders: 2
Universal Health Realty Income Trust (NYSE:UHT) is an American real estate investment trust company that specializes in healthcare-related properties. On March 14, the company declared a quarterly dividend of $0.725 per share, which was in line with its previous dividend. In 2023, the company raised its dividends for the 39th consecutive year, which makes UHT one of the best dividend stocks in the REIT sector. The stock's dividend yield came in at 8.14%, as of March 24.
At the end of Q4 2023, 2 hedge funds tracked by Insider Monkey reported having stakes in Universal Health Realty Income Trust (NYSE:UHT), down from 5 in the previous quarter. The collective value of these stakes is over $13.6 million.
11. Innovative Industrial Properties, Inc. (NYSE:IIPR)
Number of Hedge Fund Holders: 11
Innovative Industrial Properties, Inc. (NYSE:IIPR) is a key player in the real estate sector supporting the growth of the legal medical cannabis industry, offering investors exposure to the cannabis market through a real estate-focused investment vehicle. The company's quarterly dividend comes in at $1.82 per share and has a dividend yield of 7.10%, as of March 24. It is one of the best dividend stocks on our list as the company has been growing its dividends for the past seven years.
As of the end of the December quarter of 2023, 11 hedge funds in Insider Monkey's database owned stakes in Innovative Industrial Properties, Inc. (NYSE:IIPR), compared with 16 in the preceding quarter. The consolidated value of these stakes is over $142.6 million. With nearly 1 million shares, Zimmer Partners was the company's leading stakeholder in Q4.
10. Arbor Realty Trust, Inc. (NYSE:ABR)
Number of Hedge Fund Holders: 17
Arbor Realty Trust, Inc. (NYSE:ABR) is next on our list of the best dividend stocks from the REIT sector, holding an 11-year track record of dividend growth. The real estate investment trust company currently offers a quarterly dividend of $0.43 per share and has a dividend yield of 13.33%, as recorded on March 24.
The number of hedge funds tracked by Insider Monkey owning stakes in Arbor Realty Trust, Inc. (NYSE:ABR) grew to 17 in Q4 2023, from 13 in the previous quarter. The total value of these stakes is over $91 million.
9. CubeSmart (NYSE:CUBE)
Number of Hedge Fund Holders: 22
CubeSmart (NYSE:CUBE) is a Pennsylvania-based real estate investment trust company that specializes in the ownership, operation, acquisition, and development of self-storage facilities. On March 18, the company declared a quarterly dividend of $0.51 per share, which fell in line with its previous dividend. Overall, it holds a 14-year streak of consistent dividend growth, which makes CUBE one of the best dividend stocks in the REIT sector. As of March 24, the stock has a dividend yield of 4.65%.
CubeSmart (NYSE:CUBE) was a part of 22 hedge fund portfolios at the end of Q4 2023, up from 19 in the previous quarter, as per Insider Monkey's database. The stakes owned by these hedge funds have a total value of over $91.5 million. Among these hedge funds, Diamond Hill Capital was the company's leading stakeholder in Q4.
8. Federal Realty Investment Trust (NYSE:FRT)
Number of Hedge Fund Holders: 22
An American real estate investment trust company, Federal Realty Investment Trust (NYSE:FRT) specializes in the ownership, management, development, and redevelopment of high-quality retail properties. The company offers a quarterly dividend of $1.09 per share and has a dividend yield of 4.38%, as of March 24. With a 56-year streak of consistent dividend growth, FRT is one of the best dividend stocks in the REIT sector.
Federal Realty Investment Trust (NYSE:FRT) was a popular buy among hedge funds at the end of Q4 2023, with 22 hedge fund positions, compared with 15 in the previous quarter, according to Insider Monkey's database. The stakes held by these elite funds have a collective value of over $370.8 million.
7. National Retail Properties, Inc. (NYSE:NNN)
Number of Hedge Fund Holders: 23
National Retail Properties, Inc. (NYSE:NNN) primarily invests in single-tenant retail properties and leases them to tenants under long-term net leases. The company offers a quarterly dividend of $0.565 per share, having raised it by 2.7% in 2023. Through this increase, the company stretched its dividend growth streak to 34 years, which places NNN on our list of the best dividend stocks. The stock's dividend yield on March 24 came in at 5.32%.
As per Insider Monkey's database of Q4 2023, 23 hedge funds held stakes in National Retail Properties, Inc. (NYSE:NNN), compared with 24 in the previous quarter. These stakes are collectively valued at more than $240.8 million. With over 1 million shares, Citadel Investment Group was the company's leading stakeholder in Q4.
6. Agree Realty Corporation (NYSE:ADC)
Number of Hedge Fund Holders: 26
Agree Realty Corporation (NYSE:ADC) ranks sixth on our list of the best dividend stocks from the REIT sector. The company currently offers a monthly dividend of $0.247 per share and has a dividend yield of 5.31%, as of March 24.
At the end of December 2023, 26 hedge funds in Insider Monkey's database reported having stakes in Agree Realty Corporation (NYSE:ADC), compared with 28 in the previous quarter. These stakes are collectively valued at over $377.8 million.
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Disclosure. None. 12Best REIT Dividend Stocks To Buy for 2024is originally published on Insider Monkey.
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