3 REIT Upgrades To Start The Week

As an investor, it's always great to see positive news on one of your stocks because it's likely to increase the share price. The good news could be a dividend raise, a strong earnings report, a new product, service or alliance or an upgrade from an analyst at a prestigious brokerage or bank. Right or wrong, the recommendations of analysts often carry a lot of weight.

Three real estate investment trusts (REITs) just received analyst upgrades to begin a new week. Two of the REITs had price targets announced well above present prices, and one received a solid price target boost. Take a look.

Agree Realty Corp. ADC is a Bloomfield Hills, Michigan-based triple-net-lease REIT that focuses on retail properties. Its portfolio includes 2,135 owned and operated properties totaling 44 million square feet across 49 states. Sixty-nine percent of its tenants are investment grade, including well-known names like Walmart Inc. WMT, Best Buy Co. Inc. BBY Dollar General Corp. DG and Kroger Co. KR.

Agree Realty was founded as Agree Development Co. in 1971 and went public as a REIT on the New York Stock Exchange in 1994 as Agree Realty Corp.

In its third-quarter earnings report on Oct. 24, funds from operations (FFO) of $1 per share beat the estimates of $0.99 and was above FFO of $0.96 in the third quarter of 2022. Revenue of $136.81 million beat the estimates of $134.97 million and was 24.3% above revenue of $110.07 million in the third quarter of 2022. Agree Realty will report its fourth-quarter earnings on Feb. 13.

Agree Realty pays a monthly dividend, making it a favorite among income investors to pay regular monthly bills. In January 2021, it began paying monthly dividends of $0.21 per share. Since then, the dividend has grown by 17.06% to $0.247 per share. The annual dividend of $2.96 presently yields 4.78%.

Analysts seem to be trying to one-up each other in raising price targets for Agree Realty this month. On Jan. 10, Mizuho maintained a Neutral rating on Agree Realty and raised the price target to $65. On Jan. 16, Truist Securities maintained its Buy rating on Agree and raised the price target to $70.

Picking up where the other analysts left off, on Jan. 22, JMP Securities analyst Mitch Germain upgraded Agree Realty from Market Perform to Market Outperform and announced a $71 price target, the highest target among all analysts. From its most recent closing price of $61.09, that represents a 16.22% increase.

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Plymouth Industrial REIT Inc. PLYM is a Boston-based industrial REIT that owns and operates 156 properties with over 34 million square feet in 13 East Coast and Midwestern markets. Its portfolio occupancy as of Dec. 31 was 98.6%. During the fourth quarter of 2023, it leased an aggregate of 966,167 square feet, with a 23.4% increase in rental rates on a cash basis from these leases.

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In 2023, Plymouth outperformed larger and more well-known industrial REITs such as Prologis Inc. PLD and Rexford Industrial Realty Inc. REXR. Its total return, even with the interest rate hikes that decimated many REITs, was an admirable 29.88%. Still, this smaller REIT receives far less publicity than its rivals. But one analyst has just taken notice.

On Jan. 22, JMP Securities analyst Germain upgraded Plymouth Industrial REIT from Market Perform to Market Outperform and announced a $27 price target. From its most recent closing price of $22.69, that represents an 18.99% increase. 

Plymouth Industrial will report its fourth-quarter earnings on Feb. 22.

Digital Realty Trust Inc. DLR is an Austin, Texas-based data center REIT with more than 300 facilities in large metro areas in 23 countries. It calls itself "the largest global provider of cloud-and-carrier-neutral data center, colocation and interconnection solutions." Its customers include Nvidia Corp. NVDA, Oracle Corp. ORCL and IBM IBM.

Digital Realty pays a quarterly dividend of $1.22 per share. The annual dividend of $4.88 presently yields 3.55%.

Since November 2004, Digital Realty Trust has had a total return of 1,527.41% or an average annual total return of 15.64%. That long-term return makes it one of the best-performing REITs over the past two decades.

On Jan. 22, Digital Realty announced the expansion of its service orchestration platform ServiceFabric. The platform interconnects workflow participants, applications, clouds and ecosystems on PlatformDIGITAL, its global data center platform.

On Jan. 22, Scotiabank analyst Maher Yaghi upgraded Digital Realty from Sector Perform to Sector Outperform and raised the price target from $132 to $157. From its most recent closing price of $137.34, that represents a 14.31% potential increase.

Digital Realty will announce its fourth-quarter earnings on Feb. 15.

Investors should keep in mind that analysts are only correct about 50% of the time and rather than relying solely on analyst's ratings, investors should perform their own due diligence before making any stock purchases.

Weekly REIT Report: REITs are one of the most misunderstood investment options, making it difficult for investors to spot incredible opportunities until it's too late. Benzinga's in-house real estate research team has been working hard to identify the greatest opportunities in today's market, which you can gain access to for free by signing up for the Weekly REIT Report.

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