SPECIAL REPORT The Top 7 Stocks for 2024

REIT Gems: 3 Income Stock Picks for Real Estate Investors


  • Unlock dividends with these top income stock picks offering tremendous upside.
  • Realty Income Corp. (O): Realty Income shines with 25 years of growing dividends and a robust 6.22% yield, bolstered by strategic investments in recession-resistant sectors.
  • Digital Realty Trust (DLR): As a vital infrastructure provider for over 5,000 clients, including tech giants, DLR combines 18 years of dividend growth with a significant role in the burgeoning AI realm, offering a promising blend of tech and real estate.
  • Innovative Industrial Properties (IIPR): With a commanding presence in the cannabis sphere and an extraordinary 9.58% dividend yield, IIPR capitalizes on high-rent collections and strategic investments.
income stock picks - REIT Gems: 3 Income Stock Picks for Real Estate Investors

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Navigating the stock market’s current turbulence, investors with an eye for stability could potentially find solace in real-estate-investment-trusts (REIT). This is a gem among income stock picks. Despite its recent lukewarm performance, discounting REITs from an income-oriented portfolio would be remiss. Its robust yields and generous payouts offer an undeniable allure.

REITs, aren’t just any ordinary equity; they’re gatekeepers to the lucrative property sphere, owning and often operating income-generating real estate. Moreover, what makes it an even more staggering prospect is the statutory obligation to funnel 90% (or more) of their taxable income back to shareholders through dividends.  Furthermore, REITs offer a hands-off experience for investors keen on real estate market sectors without the hassle of acquiring physical properties. With high dividends in their arsenal, REITs stand as a beacon for income investors.

Realty Income Corp. (O)

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Dividend Yield: 6.22%

Amidst the market skepticism, Realty Income Corp. (NYSE:O) stands as a beacon of resilience, with 25 consecutive years of dividend payment growth. This retail real estate juggernaut, with its tentacles extending across the United States and Europe, currently offers a tempting dividend yield north of 6.2%. While commercial real estate sends shivers down investors’ spines, Realty Income’s strategic bet on convenience stores and pharmacies shields it from the sector’s notorious volatility. Moreover, its forward average-funds-from-operations stand at an impressive 9.2%, which effectively trumps the sector median by 15.6%.

It recently declared its latest dividend declaration of 26 cents per share for November, sustaining an annual yield that impressively hovers around 6%. In a landscape of uncertainty, Realty Income offers a compelling blend of stability and remains an investor’s lighthouse in tumultuous economic seas.

Digital Realty Trust (DLR)

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Dividend Yield: 4.22%

Digital Realty Trust (NYSE:DLR) is one of the top real-estate-investment-trusts (REIT) in the data center realm, serving a sprawling base of more than 5,000 clients. With AI’s rise, this REIT is pivotal, providing a critical infrastructure backbone imperative for AI’s growth, not to mention effectively safeguarding assets for giants, including Meta Platforms. DLR’s financial playbook is impressive, marked by a 24.5% year-over-year revenue increase and a robust 86.3% spike in net income. This was driven by strategic price increases and consistent occupancy rates.

What’s more, DLR’s financial health is underscored by 18 straight years of dividend growth, harmonized with a robust 10.3% boost in EBITDA and a 19.5% climb in revenue across a three-year period.  Additionally, for those looking to cash in on digital real estate, DLR stands out, fusing technological indispensability with an enduring financial ascent. The stock is up more than 16.2% year-to-date, with an 11% upside potential from current price levels.

Innovative Industrial Properties (IIPR)

A close-up shot of a marijuana growhouse.
Source: Shutterstock

Dividend Yield: 9.58%

Amid the burgeoning cannabis market, Innovative Industrial Properties (NYSE:IIPR) emerges as a trailblazer, turning apprehension into opportunity as it looks to shift gears toward stable profitability. This cannabis-centric REIT, with its strategic foothold across 19 states and an impeccable record of 98-100% rent collections, leverages its deep industry insight, robust financing, and prudent balance sheet management to cement itself as a top-tier player in its niche.

As legal cannabis sales are poised to rival stalwarts such as spirits and wine by 2030, with $70-80 billion in legal cannabis sales by 2030, IIPR is uniquely positioned to tap into this green gold rush. Not just a bystander, the company is set to play a critical role in this explosive sector, underscored by its impressive average-funds-from-operations ratio and a staggering 81% EBITDA margin. In a market teeming with potential, IIPR stands out, not merely for its current achievements but for its immense upward trajectory in the thriving world of cannabis.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Article printed from InvestorPlace Media, https://investorplace.com/2023/10/reit-gems-3-income-stock-picks-for-real-estate-investors/.

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