Look beyond commercial or residential real estate for income.
When it comes to assets that profit from owning property, real estate investment trusts are the go-to option for many investors. REITs are a special class of publicly traded stock that are granted favorable tax status to deal with the capital-intensive nature of real estate operations, but in exchange they must deliver 90% of taxable income back to shareholders. The result is a corner of Wall Street that is focused on property and delivers consistent dividends. Most investors are familiar with commercial or residential offerings, however, and overlook the many attractive industrial REITs that are out there. The following seven stocks all offer a way to play real estate with a focus on storage, manufacturing, logistics or other industrial applications. Here are the top seven industrial REITs to buy now.
Americold Realty Trust Inc. (ticker: COLD)
Americold is the world’s largest publicly traded stock that is solely focused on the operation of temperature-controlled warehouses. That may be an overly specific description without a lot of other firms vying for the title, but that’s what makes COLD attractive: the lack of competition. Americold owns and operates 185 temperature-controlled warehouses, with over 1 billion refrigerated cubic feet of storage in the United States, Australia, New Zealand, Canada and Argentina. These facilities are an integral component of the food supply chain, meaning reliable revenue for the stock — and reliable dividends for shareholders.
Dividend yield: 2.9%
Duke Realty Corp. (DRE)
Duke operates roughly 160 million square feet of industrial assets in 20 major logistics markets including New York, Seattle and Southern California. Its real estate in key distribution locations allows third-party firms to easily access customers, making it an integral part of the global supply chain. And though not exactly a household name, the $23 billion industrial REIT is actually a member of the S&P 500. The dividend yield of DRE is only slightly above the typical large-cap stock, but it’s important to note that payouts have surged from 68 cents annually back in 2015 to $1.12 at present. That’s growth of 65% even across the disruptions of the pandemic, proving the staying power of this stock.
Dividend yield: 1.8%
Extra Space Storage Inc. (EXR)
As the name implies, Extra Space is a self-storage operator that has nearly 2,000 sites across 40 states, Washington, D.C., and Puerto Rico with almost 150 million square feet of rentable space. This includes storage lockers for boxes and furniture as well as vehicle storage for boats, RVs and automobiles. Shares are up more than 30% from their 2022 lows thanks to strong top-line performance along with a series of strategic acquisitions that are starting to pay off. While it takes a bit of cash to purchase existing facilities, EXR is shrewd at only adding storage units with reliable rental rates that will ultimately pay it back in the long run. That should give investors confidence in the long-term stability of this stock.
Dividend yield: 2.9%
First Industrial Realty Trust Inc. (FR)
As the rather obvious name implies, FR is an industrial real estate company that owns and operates 64 million square feet of warehouses and light industrial space with a focus on large multinational corporations and regional customers as tenants. In August, FR announced it established a new $300 million unsecured term loan to help expand its operations beyond its already impressive footprint of roughly 70 million rentable square feet of space. Dividends have grown from 8.5 cents quarterly in 2013 to 29.5 cents presently, a growth rate of almost 250% in less than 10 years. That proves this industrial REIT’s commitment to shareholder value.
Dividend yield: 2.3%
Public Storage (PSA)
One of the top industrial REITs of 2022, Public Storage operates roughly 2,500 self-storage facilities in 38 states and another 250 or so in seven Western European nations. The company is still slightly in the red this year as of Aug. 25; however, the stock is up almost 20% from its summer lows. Furthermore, storage facilities are countercyclical investments that tend to perform well in downturns as homebuying slows and some people are forced to move out or move in with family. With reliable dividends and outperformance compared with its peers, PSA is one of the best industrial REITs right now.
Dividend yield: 2.4%
Rexford Industrial Realty Inc. (REXR)
Rexford Industrial is a roughly $11 billion real estate investment trust that is laser-focused on owning and operating industrial properties throughout Southern California “infill” markets — that is, rededicated or undeveloped lands in urban markets. As you can imagine, real estate prices in the Los Angeles and San Diego region make all properties quite valuable, so having a local team with specific expertise in these markets is a crucial part of Rexford’s success. The current portfolio spans 250 or so properties with approximately 30 million rentable square feet, making it a “goldilocks” stock that is definitely big enough to offer stability but also small and specialized enough to have unique growth potential.
Dividend yield: 1.9%
Stag Industrial Inc. (STAG)
An industrial REIT focused on logistics companies and manufacturers, STAG commonly rents entire buildings to single tenants for exclusive use. This helps provide a bit more stability to this company than other stocks have, as does its habit of inking very long-term leases. It operates about 560 properties that command a collective 110 million square feet of space, and is nicely diversified across solid tenants that include Amazon.com Inc. (AMZN) and FedEx Corp. (FDX). STAG boasts the biggest yield of any industrial REIT on this list with a payout that is more than twice the typical S&P 500 component at present.
Dividend yield: 4.5%
7 industrial REITs to buy now:
— Americold Realty Trust Inc. (COLD)
— Duke Realty Corp. (DRE)
— Extra Space Storage Inc. (EXR)
— First Industrial Realty Trust Inc. (FR)
— Public Storage (PSA)
— Rexford Industrial Realty Inc. (REXR)
— Stag Industrial Inc. (STAG)
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Update 08/26/22: This story was published at an earlier date and has been updated with new information.