The Best Performing REITs of 2023: Mastering Dividends and Dominating the Market

The year 2023 posed challenges for real estate investment trusts (REITs), as seen in the Vanguard Real Estate Index Fund ETF Shares VNQ, which registered a modest 7% growth. This moderate performance seems more attributable to prevailing market attitudes rather than an indication of poor operational results, with many REITs showing impressive resilience in their profit margins. Here were the top-performing REITs in 2023.

Tanger Factory Outlet Centers

Tanger Factory Outlet Centers SKT, with its dividend yield of 3.8%, operates as an REIT specializing in outlet malls. Their strategy focuses on owning and managing outlet centers that offer consumers brand-name products at discounted prices. Located primarily in high-visibility areas near major highways, Tanger’s properties attract both local shoppers and tourists. 

Tanger's tenant base is diverse, including various designer and name-brand manufacturers. In an era where value shopping is increasingly popular, Tanger’s focus on outlet centers positions it well to attract cost-conscious consumers, supporting its dividend prospects.

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Macerich

Macerich MAC, offering a significant dividend yield of 4.3%, is an REIT that focuses on high-end retail properties, primarily in densely populated, affluent markets. Their portfolio includes several premier shopping centers and malls across the United States. 

Macerich’s strategy involves not just leasing space but also actively managing these properties to ensure a premium shopping experience. This includes incorporating luxury retailers, high-quality dining options, and entertainment services. In a retail environment that’s shifting towards experiential shopping, Macerich’s emphasis on upscale, destination retail locations positions it to attract a steady flow of high-income shoppers, underpinning its dividend yield.

Whitestone REIT

Whitestone REIT WSR, with its dividend yield of 4%, focuses on neighborhood retail centers in fast-growing markets, primarily in Texas and Arizona. Whitestone’s properties often serve as community hubs, featuring a mix of local and national tenants, including grocery stores, restaurants, and service providers. 

Whitestone's strategy is to invest in culturally diverse neighborhoods with high population growth, driving consistent foot traffic to their properties. Whitestone’s community-centric approach, combined with their focus on essential, everyday services, provides a stable tenant base and supports their dividend payouts.

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