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Top 3 dividend REITs to navigate the stock market in H2, 2022

Top 3 dividend REITs to navigate the stock market in H2, 2022
Dino Kurbegovic

Real estate investment funds (REITs) have offered investors the chance to buy shares in a real estate portfolio for decades now, making it an ideal investment vehicle for those market participants that do not have funds to buy properties outright but would like to enjoy the benefits of owning real estate. 

Moreover, REITs often offer investors income from their diverse portfolios of real estate assets through the form of dividends, making them a prime target for dividend investors. Another benefit of REITs is that they have to pay out 90% of their taxable income as dividends. 

Thus, Finbold has identified three REITs that pay out dividends, and that should help investors ride out the possible volatility in the second half of the year.  

Prologis, Inc. (NYSE: PLD)

Despite the fact that warehouses can be built anywhere, Prologis does possess a portfolio of prime properties neatly located in markets with dense populations, near key transportation hubs. The fact that they recently completed an acquisition of Duke Realty, gives the firm additional scale in the industry that will be hard to match. 

Furthermore, the growth of e-commerce provides PLD with an enduring tailwind to its business as the increase in online shopping requires additional distribution space. At the moment, the firm offers a $3.16 annual dividend which makes out a 2.48% dividend yield.

In the last month, PLD has been trading in the $124.45 to $138.86 range, remaining in the lower part of the 52-week range. Meanwhile, technical analysis shows a support line at $112.38 and a resistance zone from $129.69 to $132.76. Further, the price action moved the shares below all moving averages, indicating a negative short-term trend. 

PLD 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

TipRanks analysts rate the shares a ‘strong buy,’ seeing the average price in the next 12 months reaching $158.83, 27.56% higher than the current trading price of $124.51.

Wall Street analysts’ price targets for PLD. Source: TipRanks  

Simon Property Group (NYSE: SPG)

Though this REIT is more sensitive to macro trends that have been currently going haywire, the current share price indicates that most of the negativity is probably priced in. The firm owns malls located in areas with a lot of population density and higher than average household incomes. 

In addition, the firm derives 1/4 of its net operating income from its class A malls and the rest from malls rated B+ or better. Further, the share price has recently formed a double bottom often indicating a change in sentiment. Equally important, the firm pays out $6.80 annually for each share held by investors having a 6.56% dividend yield.  

Over the past month, the shares have traded from $101.77 to $115.99, showing a support line at $99.22, and a resistance zone from $111.45 to $111.75.   

SPG 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

Analysts on Wall Street rate the shares a ‘moderate buy,’ seeing the average 12-month price reaching $121.85, 19.48% higher than the current trading price of $101.98, with eight analysts having a hold rating. 

Wall Street analysts’ price targets for SPG. Source: TipRanks  

W.P. Carey (NYSE: WPC)

W.P. Carey is a triple net lease REIT with a stable cash-flow business model that should be recession-proof, which steams from the highly diversified portfolio of real estate assets it owns. The dividend growth streak WPC has had is long-standing, as they have increased their dividends since 1998, basically from the day they went public. 

Currently, the dividend yield stands at 4.92%, or $4.236 annually, for each share of WPC investors hold. An additional distinguishing feature of this REIT is that it has 33% exposure to Europe and 3% to other international geographies.

The long-term trend is positive, and the short-term trend is neutral. WPC is currently trading in the middle of its 52-week range, while over the past month, it traded between $83.21 and $89.40. Further, the support line is at $83.52, and the resistance zone is from $84.89 to $86.41.

WPC 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

TipRanks analysts have a ‘moderate buy’ rating consensus, seeing the average price in the next 12 months reaching $91.50, 8.89% higher than the current trading price of $84.03; notably, there are only two hold recommendations.

Wall Street analysts’ price targets for WPC.Source: TipRanks  

In the end, investing in REITs can offer market participants a solid diversification of various businesses. Some REITS invest in warehouses, others in malls, and yet others in diversified commercial real estate, in essence, various flavors for every investor. 

The three above should hold up well over the second half of 2022, and while patient investors ride out the possible volatility, there is always a strong dividend yield to sweeten the deal even further. 

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

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