For months, diplomats and analysts have been concerned that prolonged political instability in the United States could prompt aggression. This includes Russia's ongoing war with Ukraine, North Korea's nuclear ambitions, and China's expansionist activities in the South China Sea.
Now, with so few days until the U.S. presidential election, the broader geopolitical crisis has escalated in the Middle East. The targeted killings of Hezbollah and Hamas leaders in Beirut and Tehran have intensified fears of a region-wide conflict, which the United States, preoccupied with its political turmoil, may struggle to prevent or contain.
Such geopolitical instability could lead to market volatility. In these turbulent times, investing in stable Real Estate Investment Trusts (REITs) such as Gladstone Commercial Corporation (GOOD), Alpine Income Property Trust, Inc. (PINE), and American Tower Corporation (AMT) could be a prudent strategy.
That being said, REITs are known for their historically high and reliable dividend payouts, driven by long-term tenant leases and a requirement to distribute at least 90% of taxable income to shareholders as dividends.
Moreover, an analysis of 118 US equity REITs revealed that 72 exceeded their consensus earnings estimates for funds from operations (FFO) per share in the first quarter of 2024, while 22 met their estimates.
Continuing the momentum, the United States real estate market is projected to reach $132.0 trillion in 2024, while the global real estate market is expected to hit $634.90 trillion this year. The sector is anticipated to grow at a CAGR of 2.8%, potentially reaching $727.80 trillion by 2029.
With these factors in mind, let’s examine the fundamentals of three key REIT stocks, starting with the #3 on our list.
Stock #3: Gladstone Commercial Corporation (GOOD)
GOOD acquires, owns, and operates net-leased industrial and office properties. It manages 133 properties with 16.84 million square feet of rentable space across 27 states. The properties host tenants from diverse industries, including telecommunications, healthcare, automotive, banking, and diversified manufacturing.
On July 9, GOOD announced cash distributions for July, August, and September 2024. Each month, it would distribute $0.10 per common share. The decision underscores the company’s commitment to providing regular returns to its shareholders.
GOOD has consistently paid cash distributions for 234 consecutive months. An annual dividend of $1.20 offers an 8.18% yield at the current share price. Moreover, its four-year average dividend yield stands at 8.48%.
On June 17, GOOD announced its execution of a 7-year, 2-month lease with Hub Group, Inc. (HUBG) at its 966,753 SF industrial building in Taylor, Pennsylvania, commencing July 1, 2024, which was purchased by GOOD in 2014.
HUBG is a premier third-party provider of transportation and logistical support. This move expands GOOD's industrial portfolio and continued tenant demand for such buildings.
Additionally, on May 8, GOOD acquired a 142,125-square-foot industrial facility in Warfordsburg, Pennsylvania, which spans nearly 115 acres. The total purchase price was $11.7 million, and the acquisition came at a weighted GAAP capitalization rate of 12.3%.
The investment is expected to strengthen GOOD's portfolio by improving its weighted average lease term and increasing its industrial concentration.
For the fiscal 2024 first quarter that ended on March 31, 2024, GOOD reported total operating revenues of $35.72 million. Its net income available to common stockholders increased 641.5% from the year-ago value to $304 thousand.
In addition, the company's core FFO available to common stockholders and non-controlling OP Unitholders amounted to $13.94 million or $0.34 per share.
For the next fiscal year ending December 2025, analysts expect the company’s revenue to increase 2.4% year-over-year to $147.61 million. Likewise, its FFO is estimated to rise 2.3% from the prior year to $1.45. Moreover, the company has surpassed the consensus FFO forecasts in three of four trailing quarters.
Shares of GOOD have gained 15.8% over the past six months and 11.6% over the last year to close the last trading session at $14.01.
GOOD’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 different factors, each weighted optimally.
GOOD has a B grade for Growth, Momentum, and Sentiment. It is ranked #7 in the 44-stock REITs - Diversified industry.
We rate GOOD on eight different levels. In addition to the POWR Rating grades I’ve just highlighted, you can see GOOD’s ratings for Stability, Quality, and Value here.
Stock #2: Alpine Income Property Trust, Inc. (PINE)
PINE delivers risk-adjusted returns and cash dividends by investing in, owning, and operating a portfolio of single-tenant net leased properties mainly leased to publicly traded and credit-rated tenants. It manages 138 properties with 3.8 million gross rentable square feet with leases with a weighted average lease term of seven years.
On May 28, PINE declared a quarterly cash dividend of $0.275 per share for the second quarter of 2024. Based on May 24's closing price, the dividend yielded an annualized 7.2%. Paid on June 28 to stockholders of record on June 13, this underscores PINE's commitment to shareholder value and financial stability.
PINE has raised its dividends for four consecutive years. It pays an annual dividend of $1.10, which translates to a yield of 6.34% at the current price level. Moreover, the company has raised its dividends at a CAGR of 6.5% over the past three years, while its four-year average dividend yield is 5.79%.
On August 2, PINE reported year-to-date total investment activity amounting to $66.4 million. This figure includes acquisition and structured investment activities, yielding an impressive weighted average initial investment yield of 9.2%. The robust investment activity demonstrates PINE's aggressive growth and expansion strategy.
PINE’s total revenues for the fiscal second quarter that ended June 30, 2024, increased 10.1% year-over-year to $12.49 million. Its net income grew 146.7% from the year-ago value to $222 thousand.
Moreover, the company's AFFO and AFFO per share amounted to $6.40 million and $0.43, respectively, increasing 9.6% and 16.2% from the prior year's period.
For the third quarter of fiscal 2024, ending in September 2024, PINE’s revenue and FFO are expected to grow 6.1% and 6.3% year-over-year to $12.15 million and $0.39, respectively.
Moreover, the consensus revenue and EPS estimates of $49.17 million and $1.62 for the current fiscal year ending December 2024 reflect a 7.7% and 10.5% year-over-year growth.
The stock has gained 12.7% over the past month to close the last trading session at $16.90.
PINE’s favorable fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
It has an A grade for Sentiment and a B for Momentum, Growth, and Stability. PINE is ranked #6 out of 44 stocks in the REITs - Diversified industry.
Beyond what we stated above, we have also rated PINE for Value and Quality. Get all ratings of PINE here.
Stock #1: American Tower Corporation (AMT)
AMT owns, operates, and develops real estate for multitenant communications. It works primarily on leasing space on multitenant communications to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies, municipalities, and tenants in various industries.
On May 23, AMT declared a quarterly cash distribution of $1.62 per share on its common stock. The distribution was paid on July 12, 2024, to stockholders of record at the close of business on June 14, 2024. This reflects AMT's ongoing commitment to shareholder returns.
AMT has raised its dividends for 11 consecutive years. It pays an annual dividend of $6.48, which translates to a yield of 2.76% at the current share price level. Moreover, the company has raised its dividends at a CAGR of 13.7% over the past five years, and its four-year average dividend yield is 2.51%.
On January 5, AMT and International Business Machines Corporation (IBM) announced a collaboration to speed up the deployment of a hybrid, multi-cloud computing platform at the edge. The partnership will enable AMT to integrate IBM Hybrid Cloud capabilities and Red Hat OpenShift into its neutral-host Access Edge Data Center ecosystem, enhancing its offerings.
AMT’s total operating revenues for the fiscal second quarter that ended June 30, 2024, increased 4.6% year-over-year to $2.90 billion. The company’s operating income grew 47% from the year-ago quarter to $1.28 billion. Furthermore, its adjusted EBITDA rose 8.1% from the prior year’s period to $1.89 billion.
In addition, AFFO and AFFO per share attributable to AMT common stockholders came in at $1.31 billion and $2.79, up 13.5% and 13.4% year-over-year, respectively.
For the fiscal year ending in December 2024, analysts expect the company’s revenue to grow 1.6% year-over-year to $11.32 billion. Meanwhile, the company’s EPS is estimated to rise 8.3% from the previous year to $10.69. Furthermore, AMT topped the consensus revenue estimates in all of the trailing four quarters.
The stock has gained 5% over the past five days and 19.5% over the last month to close the last trading session at $232.63.
AMT’s POWR Ratings reflect its robust fundamentals. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
It has a B grade for Momentum, Growth, and Stability. AMT is ranked #4 out of 44 stocks within the same industry.
Beyond what we stated above, we have also rated AMT for Sentiment, Value, and Quality. Get all ratings of AMT here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
AMT shares were trading at $232.65 per share on Monday morning, down $1.99 (-0.85%). Year-to-date, AMT has gained 9.64%, versus a 9.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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