One of the best ways to protect your portfolio, and generate consistent income is with some of the best REITs to buy.
Look at Digital Realty (NYSE:DLR), for example. With a yield of 3.26%, it’s getting swept up in the artificial intelligence boom. Now, thanks to artificial intelligence, data center demand is expected to rise at a 15% CAGR until 2030, according to Goldman Sachs.
“Almost every industry is now looking for new AI functionality that can streamline processes and improve results. In this new digital landscape, data centers are uniquely positioned to both provide and benefit from AI applications,” says Digital Realty.
And until the AI boom slows, which won’t happen any time soon, data centers will continue to see significant demand. All of which will drive some of the best REITs to buy, like Digital Realty to new highs. Better, it could drive dividend payouts higher, too.
That being said, we’ve included more data center REITs on this list of the best REITs to buy.
Equinix (EQIX)
With a yield of 2.22%, data center REIT, Equinix (NASDAQ:EQIX) provides the data center backbone that fuels Nvidia’s (NASDAQ:NVD) operations. Better, Nvidia’s dominance with artificial intelligence puts Equinix at the top of the list of top data center REITs to buy and hold for the long term.
In recent weeks, the REIT dropped from about $809 to $747.65, where it’s again a buying opportunity – especially with data center demand on the rise.
Moreover, Barclays’ analysts just raised their price target on the REIT to $671 with an equal weight rating. The REIT also just paid out a dividend of $4.26, which was payable on June 19. If you missed this one, more are on the way.
Even more impressive, hedge funds are tripping over each other to buy. Billionaire Steven Schonfield, for example, increased his firm’s stake in EQIX by 3,688%, buying another 28,400 shares at the end of March. Billionaire investor Dmitry Balyasny also just increased his firm’s stake in EQIX by 594%.
Iron Mountain (IRM)
The last time I mentioned Iron Mountain (NYSE:IRM), I said, “The REIT – which is aggressively expanding its data center capacity to meet the demand of the generative artificial intelligence (AI) boom is just as attractive as Digital Realty Trust.”
That was on June 5 as IRM traded at about $81. Today, after hitting a high of $89.21, it’s now back to $87.77 and is still a good buy at current prices.
Plus, earnings have been solid. In its first quarter, the company posted stronger-than-expected numbers. Adjusted funds from operations came in at $1.10 compared to expectations of 92 cents. Total revenue of $1.48 billion beat estimates of $1.45 billion. It also reiterated its funds from operations per share of $4.39 to $4.51, revenue of $6 billion to $6.15 billion, and adjusted EBITDA of $2.175 billion to $2.225 billion.
Even better, it declared a 65-cent quarterly dividend, payable July 5 for shareholders of record as of June 17.
Data Center & Digital Infrastructure ETF (DTCR)
Or, if you want to diversify with data center REITs, there’s the Data Center & Digital Infrastructure ETF (NASDAQ:DTCR), which last traded at $15.21 a share. While this ETF only yields about 1.11%, it’s a solid way to diversify at a lower cost with top data center stocks. All of which are getting caught up in the artificial intelligence demand boom.
With an expense ratio of 0.50%, the ETF holds 25 related stocks, including, Equinix, American Tower (NYSE:AMT), Crown Castle (NYSE:CCI), Digital Realty Trust, and Digital Bridge (NYSE:DBRG).
All of which should benefit from global data center investments “expected to increase from $321bn in 2022 to $410bn in 2025 to support the growth of 5G, smart grids, and other forms of tech-based infrastructure,” says Global X ETFs.
After bottoming out around $13.85, the REIT is now up to $15.21, where it’s still a buy. From here, we’d like to see it initially retest at $16.
DigitalBridge (DBRG)
Another one of the best REITs to buy that’s getting caught up in the AI demand story is DigitalBridge.
With a yield of 0.31%, the REIT’s nearly 300 data centers are a big part of its growth trajectory. The company’s CEO Marc Ganzi also believes global data center capacity will need to grow by about 300% to meet the demands of AI. All of which could fuel further upside for DBRG.
Earnings have been solid, too. EPS of a penny beat estimates for a loss of seven cents. Revenue also jumped more than 302% to $74.39 million.
Last trading at $12.85, it’s a buy. From here, I’d like to see it refill its bearish gap at around $16.50 with AI demand gaining momentum.
Billionaire Steven Schonfield also increased his firm’s stake in DBRG by 436% by adding another 676,450 shares at the end of March. Israel Englander also increased Millennium Management’s stake in DBRG by 637.5%.
STAG Industrial (STAG)
Outside of the data center REITs, another one of the best REITs to buy is STAG Industrial (NYSE:STAG).
With a yield of 4.24%, the REIT has been paying a monthly dividend of 12.3 cents throughout the first three months of the year. In addition, the REIT – which leases industrial properties, such as warehouses and distribution centers to e-commerce companies – is also benefiting from consumers shifting to online shopping.
We also have to consider that online shopping is only expected to increase. After all, it’s much easier to shop in the comfort of your home than deal with the public. According to estimates, global e-commerce sales could grow to $58.74 trillion by 2028. Plus, the number of online shoppers is expected to grow from 268 million in 2022 to 285 million by 2025. All of which will benefit REITs like STAG Industrial.
Plus, earnings haven’t been too shabby. In its first quarter, funds from operations came in at 59 cents, which beat estimates by a penny. Revenue of $187.54 million, up 8.1% year over year, beat by $3.23 million.
Apple Hospitality REIT (APLE)
Another one of the best REITs to buy is Apple Hospitality REIT (NYSE:APLE), which yields 6.54%.
At the moment, APLE owns about 224 hotels in 87 markets throughout 37 U.S. states. All of which should benefit from the upcoming travel season. It’s also about to pay a dividend of eight cents per share on June 17 to shareholders of record as of May 31. And if you missed this one, don’t worry about it. More are coming.
Some of its top tenants include hotel chains such as Marriott International (NASDAQ:MAR) and Hyatt Hotels (NYSE:H) – most of which are likely to benefit as millions prepare to take summer vacations. In addition, earnings have been solid. Its Q1 FFO of 34 cents was in line with expectations. Revenue of $329.51 million – up 5.8% year over year – beat by $2.16 million.
After catching double-bottom support at around $14, the APLE REIT is slowly starting to pivot higher again. I’d buy it here with an initial price target of $16. In the meantime, while we wait for that to happen, we can collect its 6.54% yield.
Agree Realty (ADC)
Let’s also take a look at Agree Realty (NYSE:ADC), which acquires and develops properties net leased to industry-leading, omnichannel retail tenants. As of March 31, the REIT owned and operated a portfolio of 2,161 properties, located in 49 states and containing approximately 44.9 million square feet of gross leasable area.
Better, the monthly dividend-paying REIT just declared a dividend of $0.250 per share or $3 annualized. It’s payable July 15 to stockholders of record at the close of business on June 28.
Earnings have been solid here, too. In its first quarter, FFO of $1.01 beat by a penny. Revenue of $149.45 million, up 18% year over year, beat by $1.09 million.
Hedge funds love ADC, too. Steven Cohen’s Point72 for example just increased its stake by 8,471%, adding 321,930 shares at the end of March. Israel Englander also increased his firm’s stake in ADC by 2,259%, adding 354,560 shares. Even Ken Griffin’s Citadel Advisors just increased its stake by 8,463%.
In short, follow the smart money and collect its yield.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
