Contributor, Benzinga
Updated: November 18, 2022

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Looking for the best REITs to buy this month? Keep reading to see our top picks for November for the best REITs with the highest yield, the greatest growth potential and priced at the best value.

Real REITs: Weekly Newsletter

Benzinga’s research team has identified several undervalued REITs with major upside and strong dividends.

Get weekly updates on the REITs we’re watching and take advantage of this major opportunity in the market right now.

After a miserable September and an equally dismal start to October, many real estate investment trust (REIT) stocks bottomed around the middle of the month and came roaring back over the final two weeks.

REIT stocks have a long history of strong market performance and dividends paid, but with so many to choose from, investors need to narrow down their selections to the ones most likely to continue performing well. Fortunately for investors new to buying REITs, the overall recent sector decline has enhanced the yields and opportunity for appreciation of many solid REIT companies.

The following list of REIT stocks contains three distinct categories — best high yield, best growth and best value — while using a five-year performance time frame and provides what could be the best opportunities in the REIT sector as moving into November.

Best REITs for High Dividends

When it comes to choosing REIT stocks, investors cannot just chase high-yielding dividends without considering the safety and reliability of the dividend and the company.

EPR Properties (NYSE: EPR)

EPR Properties (NYSE: EPR) is a diversified experiential REIT that owns and operates 358 movie theater chains, amusement parks, resorts and other recreational venues. EPR Properties stock was crushed between August and mid-October, falling 37%.

One large negative weighing heavily on EPR Properties’ stock price was the announcement in early September that Cineworld had filed for bankruptcy. Cineworld is the parent company of Regal Entertainment Group, which is EPR Properties’ third-largest tenant and the producer of 13.5% of its rental revenue.

With 173 movie theaters in its portfolio, and despite Fitch Ratings noting that EPR Properties maintains ample cushion to withstand any potential implications from Cineworld’s Chapter 11, Wall Street feared that a bad recession could prompt other theaters to follow Cineworld’s lead. So far that hasn’t happened, and EPR Properties was able to rally about 13% over the last two weeks of October.

EPR Properties pays a monthly dividend of $0.275. Second-quarter funds from operations (FFO) of $1.23 was above analysts’ expectations and well above the $0.825 needed to cover three months of dividend payments. The current annual yield is 8.5%, down from 9.1% in September. Third-quarter earnings will be reported on Nov. 2. The street is expecting EPS of $0.55 per share.

In October, Raymond James Financial Inc. analyst RJ Milligan lifted his previous buy rating on EPR Properties to strong buy yet lowered the target price from $55 to $48. That represents a 24% upside from its recent price of $36.63.  

At the moment, it appears that the dividend is not at risk for a cut. But that could change if more theater chains owned by EPR Properties declare bankruptcy. EPR Properties’ recent performance provides optimism that the stock may now have bottomed.

Global Net Lease Inc. (NYSE: GNL)

Global Net Lease Inc. (NYSE: GNL) is a New York-based diversified international commercial property REIT with 311 properties across 11 countries. Its 140 tenants are spread across 50 different industries.

The company disappointed the Street with FFO of $0.43 per share and $95 million in revenue last quarter, both down from a year earlier. However, its current occupancy rate is a stellar 99.9%, and its average lease term is 8.3 years. Third-quarter earnings will be announced on Nov. 3.

Global Net Lease has done quite well since the COVID-19 crash in 2020, storming back from a low of $6.65 to a high of $17.27 by June 2021. With a recent price near $13.30 and an annual dividend of $1.60, the stock sports a lofty current dividend yield over 13%.

The diversification of this REIT gives it a long-term advantage for income investors seeking a very high yield, and its high occupancy rate bodes well for it down the road. An increase in FFO would certainly help the share price.

Simon Property Group Inc. (NYSE: SPG)

Simon Property Group Inc. (NYSE: SPG) is an Indianapolis-based retail REIT that owns and leases shopping malls, restaurants, outlet centers and entertainment venues. Simon Property Group was founded in 1960 and launched an initial public offering (IPO) in 1993 at $22.25 per share.

Simon Property Group has had its share of difficulties over the past three years, including shutdowns from COVID-19 in 2020 and recent threats from inflation and recession. During the first three months of COVID-19 in the U.S.  2020, Simon Property Group’s stock price collapsed from over $103 to $37. Although that drop stunned its shareholders, those who hung on saw the price recover nicely over the next year and a half, eventually touching $164.67 in November 2021.

Simon Property Group delivered a strong price recovery over the month of October, rising 21% to a recent price near $109. The dividend yield, which had been near 8%, has now declined to 6.5%, but that’s still 11% above its five-year average. For investors looking for a stable long-term REIT with a high dividend yield going into November, Simon Property Group could be the one to own.

Best Growth REITs

When looking for the best growth REIT stocks to purchase, investors can feel confident about their selections by considering the long-term price history of the company, regardless of where that price is today. These three REITs have a terrific history of appreciation:

Independence Realty Trust Inc. (NYSE: IRT) 

Independence Realty Trust Inc. (NYSE: IRT) is a Philadelphia-based residential REIT that invests in multifamily apartment buildings in large secondary cities throughout the U.S. such as Atlanta, Raleigh, Memphis, Tennessee and Louisville, Kentucky. Its portfolio focuses on high-quality retail and employment areas as well as good school districts. 

Third-quarter operating results were announced this past week. Net income available to common shares increased year-over-year from $11.5 million to $16.2 million. Core FFO was $64.3 million, or $0.28 per share, compared to $22.7 million, or $0.21 per share for third quarter of 2021. Adjusted earnings before interest, taxes, depreciation and amortizatoin (EBITDA) was $89.3 million, well above the $31.4 million in third quarter of 2021. Combined same-store portfolio net-operating income (NOI) was up 11.5% from the previous year’s third quarter. However, earnings per diluted share of $0.07 was down from $0.11 in third quarter of 2021.

Independence Realty Trust stock hit a low of $15.04 in mid-October but bounced back to a recent price of about $17 near the end of the month.

Although the dividend has risen to 3.4% recently, investors should see Independence Realty Trust as more of a growth stock than income. As a growth vehicle, Independence Realty Trust has clearly proven its merit over time. Since the lows of the 2020 COVID-19 crash, Independence Realty Trust is up over 128%.

Prologis Inc. (NYSE: PLD)

Prologis Inc. (NYSE: PLD) is a stalwart REIT in the ownership and management of industrial logistics properties throughout the U.S. and 18 other countries. Founded in 1983, the San Francisco-based company has seen its stock price appreciate 65% since October 2017. Although it pays an annual dividend of $3.16, it is more growth than income-oriented, with an annual dividend yield of just below 3%.

October was quite newsworthy for Prologis. The first week of the month, it completed its acquisition of Duke Realty in an all-stock transaction of $23 billion. The acquisition of approximately 480 new properties is expected to be immediately accretive to earnings, and the company forecasts to increase its Core FFO by $0.20 to $0.25.

On Oct. 19, Prologis announced its third-quarter earnings, and it was quite positive. FFO of $1.73 per share was up over 66% from the same quarter a year ago. Revenue of $1.75 billion was up 48% year-over-year. Third quarter occupancy rate of its properties came in at an impressive 97.7%.

For growth investors, Prologis is still one of the best REITs. It still looks attractive at a recent price near $108 and could be a great stock to pick up in November for the long term.

Mid-America Apartment Communities Inc. (NYSE: MAA) 

Mid-America Apartment Communities Inc. (NYSE: MAA) is another REIT that specializes in purchasing and leasing apartment complexes.  It owns over 101,000 units in 296 communities across 16 states and Washington, D.C. Most of Mid-America Apartment Communities’ properties are located in the Southeast, Southwest and Mid-Atlantic states.

Heavy demand for rental property over the last several years has sent rents soaring and been a catalyst for Mid-America Apartment Communities doubling in price since 2017. Despite some difficulties encountered during the worst of the 2020 pandemic, it has improved its overall revenue and earnings per share (EPS) substantially since 2018.

On Oct. 26, Mid-America Apartment Communities announced its third-quarter operating results. Earnings per share was $1.05, up from $0.73 a year ago, and the FFO of $2.19 was up from $1.85 year-over-year.

Chairman and CEO Eric Bolton noted, “We continue to see strong demand for apartment housing across our Sun Belt markets as steady growth in jobs and wages, along with positive new household formations and migration trends across our markets, fuels a growing need for housing.” 

But analysts are not quite as enthusiastic. In October, analysts from four different firms lowered their price targets between $160 and $189, while maintaining ratings from neutral to overweight. Fears of a recession continue to weigh on apartment REITs. Nonetheless, after hitting a low of $146.56 in mid-October, Mid-America Apartment Communities stock is up about $10 over the last two weeks.

The stock has been a big winner over the past five years, and the dividend yield of $5 per share yielding just above 3% enhances its appreciation. Now well off its high of $227 last November, Mid-America Apartment Communities could continue to perform well this November.

Best Value REITs

Long-term investors looking for undervalued REITs should consider solid companies with good track records over the years that for one reason or another have fallen out of favor with Wall Street. These REITs now provide strong dividend yields for income investors and over time may provide solid appreciation as well, once economic conditions improve.

S.L. Green Realty Corp. (NYSE: SLG)

SL Green Realty Corp. (NYSE: SLG) is the largest owner and landlord of New York City office buildings. Business was very good and the stock was doing well until early 2020 when the outbreak of COVID-19 decimated the shares of many office REITs.

In the span of a few short months, SL Green’s $83 stock collapsed 60% to $33, as fear-driven investors wondered whetjer people would ever return to office work again. The short answer was “yes,” and by January 2022 SL Green had slowly but surely climbed up to $82 a share.

However, new inflation and recession fears have driven the price back down to a recent 52-week low of $35.49. Despite this, the annual dividend of $3.73 (9.4% yield) is still well-protected by the FFO. One benefit of SL Green is that it pays dividends monthly, rather than quarterly, which is helpful for retirees on a budget.

In the news this past month, SL Green and Caesars Entertainment Inc. announced that they have proposed the redevelopment of a large 54-floor building in the busy Times Square area of New York City to house a new casino and theater. However, it remains to be seen whether the state will approve that or not.

On Oct. 19, SL Green reported third-quarter earnings per share of $0.11 and FFO of $1.66 per share, down from $1.83 per share one year ago but a penny above expectations. Revenue of $212.5 million was above $205.2 million from the third quarter of 2021 and well above analysts’ expectations of $157.2 million.  

Truist Securities recently maintained its rating on SL Green at buy but lowered its price target from $59 to $51. That’s almost 29% above its recent price.

With SL Green down about 58% from its 52-week high of $85.18, much of the recessionary risk of high office vacancies is already out of the stock. If the casino deal goes through, SL Green stock could have a huge upside.

Apple Hospitality REIT Inc. (NYSE:APLE)

Apple Hospitality REIT Inc. (NYSE: APLE) is a hotel REIT that owns and operates 220 hotels in 87 markets across 37 states. The portfolio includes 96 Marriotts, 119 Hiltons, four Hyatts and one independent hotel.

The 52-week range for the stock is $13.79 to $18.69. The stock was recently near $17, having climbed about 27% in October off its lows.

In October, the board of directors authorized an increase to its monthly paid dividend from $0.07 to $0.08 per share. The new annual dividend of $0.96 per share yields about 5.6%.

Apple Hospitality REIT’s second-quarter results were excellent, increasing its net income by 222% over the second quarter of 2021. FFO of $0.48 was more than ample to cover three months of dividend payments totaling $0.21. Its next earnings report is due out on Nov. 7. The Street is looking for $0.24 per share.

Stag Industrial Inc. (NYSE: STAG)

STAG Industrial Inc. (NYSE: STAG) is a Boston-based REIT that purchases and operates single-tenant industrial properties across 40 states. It currently has 569 properties in its portfolio worth approximately $8.1 billion. Amazon.com Inc. is STAG Industrial’s largest tenant and accounts for about 3% of its total rent. STAG Industrial’s dividend is also paid monthly, making it a good source of income for retirees to pay ongoing bills.

Despite increasing its revenue and EPS over the last few years, plus beating analysts’ estimates over the last four quarters, STAG Industrial’s price is down about 38% since the beginning of 2022. Several analysts also cut their ratings and target prices this month.

But the current dividend yield of 4.9% is well above the 3.5% yield of last spring, making STAG Industrial a potential value play for income investors right now.

One negative with STAG Industrial is that the dividend has only grown by 3% over the past five years. However, the dividend has never been reduced nor eliminated, and the latest quarterly FFO of $0.56 is more than sufficient to cover three months of dividend payments totaling $0.365.

The steadiness and reliability of the monthly dividend, plus the decline in price this year, make STAG Industrial a worthwhile stock to consider purchasing this October.

Best Non-Traded and Private REITs

(Buy Shares)

Not all REITs are publicly traded on a major stock exchange. The benefit to this type of REIT is that their prices aren't affected by market sentiment. Instead, share prices are directly tied to the REIT's net asset value (NAV), meaning less volatility and more predictable growth.

Fundrise Growth eREIT III

While many publicly traded REITs are trading near their 52-week lows, the Growth eREIT III is up 17.2% YTD with a 2.53% dividend yield. The REIT invests in value-add multifamily properties in Texas and California.

The value-add strategy allows for greater long-term growth in terms of both property appreciation and income, making an investment in the Growth eREIT III a solid play for investors comfortable with riding out their investment for 5+ years.

The REIT's most recent NAV update puts it share price at $17.77

Fundrise Growth eREIT VII

(Buy Shares)

Another REIT offering from Fundrise is the Growth eREIT VII, which presents a rare opportunity to invest at a discount after its share price dipped to $11.60.

The REIT's portfolio is 100% allocated to single-family rentals in the Sunbelt Region of the United States, where long-term rent growth is expected to remain strong. The majority of the single-family rentals are in rental communities, allowing for greater price protection from changes in the housing market.

Despite the recent dip in share price, the REIT is still up 4.2% YTD.

See also: Fundrise Review 2022

Recent REIT Analyst Ratings

Top Analyst Ratings

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TickerCompanyAnalystRatingPrice Target

Best Performing REIT Sectors

These were the best performing REIT sectors based on total returns for the full year 2021.

SectorNumber of REITsYTD Total ReturnSept. Total ReturnAvg. Dividend Yield
Self Storage5-21.44%-11.89%3.29%
Industrial12-35.50%-16.39%3.09%
Residential20-27.09%-7.94%3.20%
Retail33-26.19%-11.11%5.68%
Specialty9-12.03%-10.84%5.73%
Infrastructure4-27.19%-14.85%2.91%
Diversified13-25.29%-16.79%6.43%
Timber3-26.50%-15.22%2.91%
Data Centers2-35.08%-15.48%3.15%
Office20-36.69%-8.97%5.44%
Hotel14-19.55%-12.78%2.32%
Health Care15-24.76%-14.53%5.26%
FTSE Nareit Mortgage REITs31-35.40%-24.18%15.03%

What to Look for When Choosing The Best REITs

While publicly-traded REITs are bought and sold on the stock market like any other publicly-traded company, REITs are a unique asset class that needs to be analyzed differently than other stocks. 

Funds From Operations (FFO)

If you're familiar with stocks, you're most likely familiar with terms like earnings per share (EPS) and price-to-earnings ratio (p/e ratio). However, these metrics don't offer much help when looking at an equity REIT.

To understand a REIT's true cash flow, you have to look at their funds from operation (FFO). Since real estate is a depreciable asset, a REIT's reported net income includes a significant depreciation expense. It also includes capital gains and losses from the sale of properties, which don't represent what investors can expect the company to earn on a consistent basis.

FFO adds depreciation back into the REIT's net income and takes out any gains or losses on the sale of property, providing a more accurate picture of a REIT's true earnings.

To use FFO as a way to value REITs, we divide the REIT's current share price by its FFO per share to get a price to FFO ratio. We then compare the price to FFO of the different REITs in each real estate sector to find value opportunities.

Balance Sheet

REITs have to carry a lot of debt in order to finance the properties they purchase. This is especially true because REITs are required to pay out 90% of their taxable income to shareholders in the form of dividends. This doesn't leave REITs with the ability to stockpile a lot of cash.

It's important to make sure that the REIT you're investing in isn't carrying too much debt, though. The easiest way to do this is by looking at their total debt compared to their earnings before interest, tax, depreciation and amortization (EBITDA). This is called a debt to EBITDA ratio.

For instance, if a REIT has a total of $1 billion in debt and their annual EBITDA is $250 million, you would divide $1 billion by $250 million to get a debt to EBITDA ratio of 4.

Ideally, you want to look for REITs with a debt to EBITDA ratio somewhere between 4 and 6. Anything above 6 and their balance sheet starts to look risky. You also want to make sure that they're not too conservative with their debt. A debt to EBITDA ratio below 4 can indicate that they're using too much cash that could be going to investors instead of utilizing debt.

A solid REIT management team will use a reasonable amount of debt to maximize their overall returns. This means more growth and higher dividends being paid to investors.

Dividends

One of the greatest advantages to REITs is their dividends. On average, REITs pay out significantly higher dividends than most other dividend stocks. 

You want to be careful not to get caught in a yield trap, though. Some REITs may increase their dividend payments to an amount they can’t sustain in order to attract or keep shareholders. They also may put off cutting dividends when their FFO has dropped. In either case, buying a REIT with a dividend it can’t sustain is a quick way to lose money. 

To get an idea as to whether a REIT’s dividend is safe, you’ll want to look at the FFO payout ratio. This compares the company’s FFO per share to its dividend rate. 

For instance, if a REIT has an FFO per share of $2 and a dividend payment of $1.50 per share, you’ll simply divide the dividend rate by the FFO per share to get 75%. 

Ideally, the REIT’s FFO payout ratio will be somewhere between 70% - 80%. However, a lower payout ratio is fine if you’re happy with the yield. A slightly higher payout ratio isn’t necessarily a red flag as long as they’ve consistently maintained that payout ratio while either keeping or increasing their dividend payments over time. 

The Real Estate

You can’t forget that investing in a REIT is essentially investing in a real estate portfolio. If you were buying properties directly instead of investing in a REIT, you would want to invest in assets that would provide you the greatest potential return with the least amount of risk possible. You want to look at REITs the same way. 

If you’re looking for a dependable REIT, you’ll want to look at ones that invest in a property type with a strong outlook. For instance, if you think shopping malls are doomed you won’t want to invest in a REIT that owns a lot of shopping malls. 

REIT ETFs

A REIT ETF is an exchange-traded fund that invests in REITs and other real estate stocks. These funds typically follow a REIT index and have a diversified portfolio with investments spread out across multiple companies.

Investing in The Best REITs

A REIT’s recent financials provide a great basis for choosing the best ones to buy, but major changes can happen between quarterly filings. Before investing in a real estate stock, be sure to look for recent news about any acquisitions, dispositions, offerings, or any other relevant news that can affect their future performance. You can learn more about how to use REITs to invest in the real estate market with our guide on How to Invest in REITs.

Real REITs: Weekly Newsletter

Benzinga’s research team has identified several undervalued REITs with major upside and strong dividends.

Get weekly updates on the REITs we’re watching and take advantage of this major opportunity in the market right now.

Related content: BEST HIGH-YIELD REITS

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