3 best REITs to buy now and keep for the next decade

It can be difficult to look at the carnage in the markets right now and identify stocks that can restore some stability to your damaged portfolio. But there is a whole class of them that, if chosen well, can help you do just that.

We are talking about real estate investment trusts (REITs). There are now about 225 publicly traded REITs. They operate income-producing portfolios and are required by law to pass at least 90% of their taxable income to shareholders in the form of dividends.

To be clear, REITs have not escaped deflation. For example, file Vanguard Real Estate Index Fund ETF (VNQ 2.22%) A weighted group of about 160 REITs is down 19% year-to-date, worse than about 17% for the S&P 500.

But in that group are a number of individual REITs that have outperformed the larger market for years. We’ll look at three of them who have the portfolios and experience to do the same when things change. Until then, you can sleep a little better at night knowing that each of these stocks provides a good stream of passive income to help calm things down for the time being.

The three we’ll look at here are Extra storage space (EXR 2.29%)And Sun Societies (SUI 2.75%)And SBA Communications (SBAC 3.00%). Their total returns for 10 years were, respectively, about 689.9%, 518.7% and 423.3% compared to 258.8% Standard & Poor’s 500 Presented in total return from 2012 to 2022.

Total return, of course, takes into account both the stock price and dividend payments, and as REITs, these stocks have an obligation under the tax code to pay at least 90% of the company’s taxable income to shareholders. Here’s a look at what that total return would look like now if you had invested $10,000 in each of those at this point in 2012.

^ SPXTR data by YCharts.

Why it’s a good idea to buy all of them and keep them for the next decade

So, what makes each of these portfolios potential profit generators for at least the next 10 years? Let’s take a quick look at each of them.

Extra storage spaceWith its omnipresent green labels, Extra Space Storage is a very visible presence in the self-storage business, with a portfolio of 2,130 either owned, operated, or both stores in 41 states and Washington, DC, making it the second-largest owner/operator in the business. (distance public storage) and the largest self-storage management company in the country.

This is the kind of business that can mitigate the effects of inflation by increasing the rent on all those short-term rentals, and as CEO Joe Margolis said in his Q1 22 earnings announcement: “We made an exceptional start in 2022, driven by high occupancy and strong Strong pricing.

These strong fundamentals can be expected to continue moving forward, and this lends further optimism to the notion that the company can continue to increase dividend payouts as well, having increased by 20% quarterly and 50% annually.

Image source: Getty Images.

Sun Societies: This REIT has been in operation since 1975 and has been publicly traded since 1993. During that time, it has built a portfolio of more than 159,300 RV locations and 47,500 wet glide spots and dry storage spaces in 603 manufactured homes, RVs and marinas in 39 states, Puerto Rico, Canada, and the United Kingdom.

Sun says it has purchased $9.9 billion in real estate since 2010 — including $1.6 billion for 45 properties so far this year alone — and in its Q122 earnings report it noted that “demand for affordable housing and outdoor vacations” provides” sustainable tailwind” work. This indicates a smoother sailing into the future for this unique residential property.

SBA Communications: SBA Communications is the smallest of the three big REIT towers – with a total of about 30,000, compared to more than 40,000 and 220,000, respectively, for Crown Castle International And American Tower.

But this REIT is not shrinking in the face of competition. SBA has been in operation since 1989 and is expanding its operations which already includes 16 markets in North and South America (mainly Brazil), the Philippines and Africa (mainly South Africa).

In their Q122 earnings report, SBA CEO Jeffrey Stubbs said they are seeing strong demand across all of their markets in a significant way and that they are actively helping US carriers build their 5G networks as they work through the demand backlog that will keep the business growing from just so At least 2023.

Given the continued growth of mobile communications in general, keep an eye out for this essential infrastructure provider to continue its own growth over the next decade and beyond.

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