The real estate sector is a big deal in our economy. Beyond bricks and mortar, the sector creates jobs, services, and growth across the continental United States. Also, real estate stocks let you invest without buying actual buildings. It’s like owning a small part of the companies rather than the properties themselves. As a result, real estate stocks are a popular choice among investors.
Popular as the sector might be, many people have been pessimistic about the market’s current condition. High real estate prices, high mortgage rates, and low inventory remain prevalent. And this has had its effect on real estate in general.
Despite the setbacks, some companies offer refuge by offering a stable dividend and growth opportunities. Here are some of the most promising real estate stocks to look at right now.
American Tower Corp (AMT)
American Tower Corporation (NYSE:AMT) is the first real estate stock on the list. The company is one of the leading global real estate investment trusts (REITs) and has over 28 years of experience owning, operating, and developing property for wireless and broadcast communications.
Headquartered in Boston, American Tower has a portfolio of nearly 225,000 communication sites worldwide, about 43,000 properties in the U.S. and Canada, and approximately 182,000 international properties. American Tower was recently named Top 25 “Dividend Giant” with “a staggering” $14.86 billion in ETF-held stock.
Today, the company pays a 3.14% dividend yield, has a consistent payout history, and has strong long-term growth, solidifying its industry position. AMT’s third-quarter financials show strong growth despite a dip in net income. Total revenue rose 5.5% to $2.819 billion, mostly driven by a 7% increase in property revenue to $2.792 billion. Adjusted EBITDA also grew 10.4% to $1.814 billion, although net income fell 29.6% to $577 million. All in all, 19 analysts rate AMT a strong buy rating with a high estimate of $259, representing 20% upside potential.
With all that being said, AMT represents a promising investment opportunity and one of the best real estate stocks to buy.
Alexandria Real Estate Equities (ARE)
The next real estate stock on our list is Alexandria Real Estate Equities (NYSE:ARE). Like American Towers, the company is an REIT that has been around for almost 30 years. Alexandria manages over 75-million square feet of properties across research centers in North America, serving over 800 high-profile tenants. These include companies specializing in life science, agricultural tech, and technology campuses.
Today, its market capitalization is roughly $20 billion. The company recently announced a 2.4% dividend increase to $1.27 per share for the fourth quarter this year, up from $1.24 last quarter. The dividend ex-date is Dec. 28 and will be paid out on Jan. 12, 2024.
ARE delivered solid financial results in the third quarter, with net income rising 7.9% year-over-year to $1.8 billion. This growth builds on consistent positive trends in the company’s same property net operating income.
Looking ahead, ARE’s decision to incorporate a 3% annual rent increase in 96% of its leases helps ensure future profitability. Their balance sheet also reflects robust liquidity of $5.9 billion and no debt maturities due before 2025. And for the icing on the cake, analysts estimate the stock has roughly 55% upside potential.
Ventas, Inc. (VTR)
The last real estate stock, but not least, is Ventas, Inc. (NYSE:VTR). Ventas is a healthcare REIT that has been around for over 26 years and is listed on the S&P 500. With an enterprise value over $31.75 billion and 1,400 properties, it capitalizes on the growing aging population’s demand for senior housing and medical facilities. Ranking as the 19th largest REIT in the S&P 500, Ventas has delivered an impressive 17% annualized return to shareholders since 1999.
The company reported positive financial growth in the third quarter. Net operating income increased by 5.1%, while same-store cash net operating Income jumped by 7.9%. This growth came from higher occupancy rates, increased revenue per occupied room, and controlled operating expenses, resulting in a 230 basis point margin expansion. Although net loss per share was $0.18 for the quarter, this was recorded as a non-cash impairment on real estate assets held for sale. The company maintained a dividend of $0.45 per share, translating to a 3.85% yield. On top of that, analysts rate the stock as a strong buy with a high target of $53 per share.
On the date of publication, Rick Orford 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.
