All 11 Global Industry Classification Standard (GICS) sectors are all down this year, with the exception of energy, which is up big. The rise in interest rates has weighed upon the market, but the removal of the Federal Reserve punchbowl is one of the biggest reasons for this year’s horrible stock market performance. Given the terrible print last week for the consumer and producer price indexes, another 75-basis-point increase is likely on the way in early November. While yet another obstacle, at least that increase will get us closer to the ultimate terminal rate for federal funds.
One asset class that tends to survive rate increases and inflationary times is real estate investment trusts (REITs), because as overall costs rise, so do rents and leases that REITs hold. In fact, during the last 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 the following have been hit very hard and are offering the best entry points for long-term investors looking to add hard assets that pay dependable dividends to their portfolios. While all seven of these top 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, 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 5.89% distribution. The BTIG Research target price on Getty Realty stock is $30, and the consensus target is $31.21. The stock closed on Tuesday at $28.28.
Gladstone Commercial
Like most in the sector, this stock was hit hard as interest rates charged higher, 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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