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3 Top-Rated REITs for High Dividends and Growth Potential

Pabio October 29, 2024

Real estate investment trust, or REITare gaining traction among income-oriented investors due to their ability to offer consistent dividends as well as long-term growth prospects.

So, investors looking for high dividend yields might consider looking at American Tower. Company (AMT), SBA Communications Corporation (SBAC), and Alexandria Real Estate Equities, Inc. (ARE), which are also expected to grow.

In the current environment, slowing inflation and stabilizing interest rates create a favorable environment for REITs. Samuel Sahn, managing partner and portfolio manager at Hazelview Investments, believes that “Macroeconomic conditions are shifting in favor of interest rate-sensitive sectors like REITs.” These terms help REITs reduce borrowing costs, making it easier to expand their portfolios and improve their profitability.

Investors are particularly attracted to top-rated REITs specializing in sectors such as industrial properties, residential space and data centers, each thriving in response to emerging market trends. Moreover, REITs offer diversification opportunitieswhich makes them less correlated. REITs can help maximize returns while balancing sector-specific risks.

The global REIT market is expected to grow by $350.20 billion by 2028, showing a CAGR of 2.9%showing truly positive growth of REITs in the economy. REITs offer an attractive combination of income generation and capital appreciation.

Given these favorable trends, let’s take a detailed look at the fundamentals of the stocks mentioned above:

American Tour Company (AMT)

AMT owns, operates and develops real estate for multi-tenant communications. Its primary business is leasing space at multi-tenant communications sites to wireless service providers, radio and television companies, wireless data providers, government agencies, municipalities and to other industries.

On October 25, AMT paid a quarterly cash distribution of $1.62 per share on its common stock. He raised his dividends for 11 consecutive years. The company pays an annual dividend of $6.56, which translates to a yield of 2.91% at the current share price level, while its four-year average dividend yield is 2.58%.

Additionally, AMT’s dividend payouts have grown at CAGRs of 9.3% and 12.7% over the past three and five years, respectively.

AMT’s total operating revenues for the fiscal second quarter ended June 30, 2024 increased 4.6% year over year to $2.90 billion. The company’s operating profit increased 47% from the same quarter last year to $1.28 billion, while its attributable net profit stood at $900.30 million, an increase of 89.3% compared to last year.

Additionally, AFFO and AFFO per share attributable to AMT common stockholders were $1.31 billion and $2.79, up 13.5% and 13.4% year-over-year. the other, respectively. Additionally, its adjusted EBITDA increased 8.1% from the prior-year period to $1.89 billion.

Street expects AMT’s FFO for the current year (ending December 2024) to rise 7% year-over-year to $10.56, while its revenue is expected to reach $10.94 billion. Additionally, AMT has exceeded consensus FFO estimates in three of the last four quarters, which is promising.

Additionally, AMT’s revenue has grown at a CAGR of 9.7% and 8.3% over the last three and five years, respectively. Additionally, its net profit grew by 11.1% CAGR over the past five years.

The stock has gained 37.6% over the past year and 28.9% over the past six months to close the last trading session at $222.80.

AMT POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

AMT has a B rating for growth, momentum, stability and quality. It is ranked #4 out of 44 titles in the REIT – Diversified industry. Click here to see additional notes for AMT (Value and Sentiment).

SBA Communications Company (SBAC)

SBAC is a leading independent owner and operator of wireless communications infrastructure, including towers, buildings, rooftops, distributed antenna systems (DAS), and small cells. It operates through two segments: domestic site rental and international site rental.

On September 18, supported by its strong financial performance, SBAC paid its shareholders a quarterly dividend of $0.98 per share on its Class A common stock. It pays an annual dividend of $3.92, which corresponds to a yield of 1.62% at the current price level. The company’s four-year average dividend yield is 1.08%. Additionally, SBAC’s dividend payouts have grown at a CAGR of 59.3% over the past five years.

SBAC’s total revenue for the fiscal second quarter ended June 30, 2024 was $660.48 million, with a 1.2% year-over-year increase in rental revenue from its locations.

Its operating profit was $354.47 million, up 46.9% year-on-year, while its net profit increased 30.4% year-on-year. last year to reach $159.45 million. Additionally, the company’s AFFO and AFFO per share were $354.33 million and $3.29, respectively, an increase of 1.5% and 2.8% YoY. previous year.

Analysts expect SBAC’s revenue and FFO for the current year (ending December 2024) to be $2.66 billion and $12.35, respectively. For fiscal 2025, its revenue and FFO are expected to increase 2% and 2.8% from the previous year to $2.71 billion and $12.70, respectively.

Over the last three and five years, SBAC’s operating profit (EBIT) grew at a CAGR of 21.5% and 17.2%, respectively, while its diluted EPS grew at a CAGR of 33.1%. over the last five years.

Over the past year, the stock has surged 23.6%, closing the last trading session at $241.79.

SBAC’s bright outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It also has a B rating for growth, momentum and quality. Within the REITs – Diversified industry, it is ranked #6 out of 44 stocks. Click here to see SBAC ratings for Value, Stability and Sentiment.

Alexandria Real Estate Equities, Inc. (ARE)

ARE is a life sciences real estate investment trust that owns, operates and develops collaborative mega campuses in life sciences, agricultural technology (ag-tech) and advanced technologies in cluster locations of AAA innovation.

On October 15, the company paid its shareholders a quarterly dividend of $1.30 per common share. With 13 consecutive years of dividend growth, ARE pays an annual dividend of $5.20, which translates to a yield of 4.60% at the current price level. Additionally, its dividend payouts have grown at CAGRs of 5.2% and 5.5% over the past three and five years, respectively.

ARE’s revenue increased 10.9% year over year for the third quarter ended September 30, 2024, to $791.61 million. Its net income increased 213% from last year to $213.60 million, while investment income was $15.24 million, compared to a net loss of $80.67 million. dollars a year ago. Furthermore, its FFO and FFO per share were $407.87 million and $2.37, representing a year-over-year increase of 5.5% and 4.9%.

The consensus revenue estimate of $777.55 million for the fiscal fourth quarter (ending December 2024) represents a 2.7% year-over-year increase. The consensus FFO estimate of $2.39 for the same quarter indicates a 5% year-over-year improvement. The company has an impressive history of surprises; it exceeded consensus EPS estimates in three of the following four quarters.

ARE’s revenue has grown at a CAGR of 15.4% and 15.9% over the last three and five years, respectively. Similarly, the company’s profits from continuing operations have grown at a CAGR of 23.4% over the last five years.

ARE stock has surged 22.9% over the past year to close the most recent trading session at $113.02.

ARE’s position is reflected in its POWR Ratings. It has a B grade for growth and momentum.

It is ranked #2 out of 12 titles in the REIT – Office industry. Click here to see other ARE ratings for value, stability, sentiment and quality.

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AMT stock was trading at $222.40 per share Monday afternoon, down $0.40 (-0.18%). Year to date, AMT has gained 5.57%, compared to a 23.52% rise in the benchmark S&P 500 during the same period.