In every major sell-off, the proverbial baby is almost always thrown out with the bathwater, because terrified investors think that everything is going to zero and will stay there. While many of the stocks that have been hammered during one of the worst five months in the stock market in years deserve what they got, others that have been hit hard are offering investors who were savvy enough to take profits when the sun was shining and raise some cash some incredible entry points.
Real estate investment trusts (REITs) tend to hold up well during periods of inflation, and they also can do well in a rising rate environment, provided rates do not explode higher. The Federal Reserve is targeting a 3.25% to 3.50% end game for rate increases, which is far below the 5% federal funds we saw in 2007.
We screened our 24/7 Wall St. REIT universe looking for beaten-down leaders that are paying generous and dependable distributions and also are rated Buy at top Wall Street firms. We found seven of the top names in the sector that all look like great ideas for weary investors looking for a safe space. 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 6.11% distribution. JMP Securities has a $32 target price on the shares. The consensus target is $33.75, and the stock closed on Monday at $26.86.
Gladstone Commercial
This stock has been hit hard as interest rates charged higher and is offering the best entry point since last November. Gladstone Commercial Corp. (NASDAQ: GOOD) is focused on acquiring, owning and operating net leased industrial and office properties across the United States.
As of June 30, 2021, Gladstone owns a diversified portfolio of 121 office and industrial properties located in 27 states and leased to 106 tenants. The company has grown the portfolio in a consistent, disciplined manner at a rate of 18% per year since the IPO in 2003. They match long-term leased properties with long-term debt to lock in the spread to create a durable, stable cash flow stream to fund monthly distributions to shareholders. Current occupancy stands at 96.5% and occupancy has never dipped below 95.0% since our IPO in 2003.
Most importantly for investors, Gladstone has a track record of success, as exhibited by a history of strong distribution yields, consistent occupancy greater than 95.0%, and 10+ years of paying continuous monthly cash distributions.
Gladstone Commercial stock investors receive a 7.79% distribution. The B. Riley Securities price target is $23, and the consensus target is $25. The last trade for Monday was reported at $19.33.
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