If you thought June and July were rough from an interest rate standpoint, September may be just as bad, as it is pretty baked in now that the Federal Reserve will raise rates next month by another 75 basis points before taking a break until November. As we have noted before, the adage “Don’t fight the Fed” works both ways. There is a good chance the Fed will continue to raise rates until the spiraling inflation starts to calm down.
One asset class that tends to survive rate increases and inflationary times is real estate investment trusts (REITs). As overall costs rise, so do rents and leases that REITs hold. In fact, during a recent rate hiking cycle, REITs outperformed the S&P 500 by more than double. In addition, rising rates are forcing some potential homebuyers to remain in rentals, whether it be houses or apartments.
We screened our 24/7 Wall St. REIT research database looking for solid ideas that also pay large and dependable dividends. All of these have been hit hard and are offering the best entry points for long-term investors looking to add hard assets to their portfolios.
While all seven of the companies we uncovered are rated Buy at major Wall Street firms, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Getty Realty
Despite climate change concerns, the reality is people still need gasoline for their cars, trucks and vans, and gas stations still provide that basic need. Getty Realty Corp. (NYSE: GTY) is a publicly traded, net lease REIT specializing in the acquisition, financing and development of convenience, automotive and other single-tenant retail real estate. As of March 31, 2022, the company’s portfolio included 1,014 properties in 38 states and the District of Columbia.
With big footprints in both Texas and California, the company serves some of the most populated regions of the country, and it posted strong first-quarter results with funds from operations surpassing Wall Street expectations.
Shareholders receive a 5.47% distribution. The JMP Securities target price on Getty Realty stock is $32. The consensus target is $33.21, and the stock closed on Friday at $30.32.
Gladstone Commercial
This stock was hit hard as interest rates charged higher and is offering the best entry point in over a year. Gladstone Commercial Corp. (NASDAQ: GOOD) is focused on acquiring, owning and operating net leased industrial and office properties across the United States.
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