The 7 Best REITs to Buy in January 2024
With shares in real estate investment trusts trending higher as expectations rise that interest rates will start coming down in 2024, you may be curious as to what are the best REITs for 2024.
Yet while it’s been this macro factor driving the REIT run-up, you may consider REIT stocks that have more than just the specter of more favorable monetary policy on their side.
For instance, there are many REITs that, for reason or another, currently trade at big discounts to their underlying net asset values. In addition, there are REITs trading at fair or slightly more-than-fair prices, but have strong growth potential, via both portfolio expansion and rental increases.
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Alongside value and growth REITs, there are also REITs that, thanks to high, sustainable yields, that besides being strong opportunities for capital growth, are also great opportunities for income-focused investors.
So, what are the best REITs for 2024? Consider these seven, each of which fits within any, some, or all of the aforementioned categories.
Brandywine Realty Trust (BDN)
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Based in Philadelphia, Pennsylvania, Brandywine Realty Trust (NYSE:BDN) owns office properties in its home metro area, as well as in the Austin, Texas, Richmond, Virginia, and Washington, D.C. metro areas. Over the past five years, this REIT has performed poorly.
During this timeframe, BDN stock is down by nearly 60%, due to declining rental income, the rise in interest rates, plus the overall downturn in the commercial office space market. However, with confidence rising that the interest rate picture will improve, Brandywine has been making a comeback since November.
Yet while this REIT stock has bounced back off its lows by 62.6%, buying BDN at current prices could still prove to be a profitable move. Shares currently sport a double-digit forward yield (10.77%). Brandywine also continues to trade at a big discount (36%) to its book value, suggesting the stock remains very undervalued.
CTO Realty Growth (CTO)
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The potential for growth, value and yield all combine to make CTO Realty Growth (NYSE:CTO) one of the best REITs for 2024.
This Winter Park, Florida-based REIT owns a diversified portfolio of office and retail properties throughout the Southern and Southwest United States, properties in faster-growing “sun belt” metros like Atlanta, Georgia and Dallas, Texas.
Besides offering investors exposure to an expanding portfolio of properties in areas experiencing population and economic growth, CTO stock also offers good value.
As a Seeking Alpha commentator argued last month, CTO trades at around an 18% discount to book value, with catalysts in motion to help minimize this discount.
As for yield, CTO Realty Growth arguably scores high in this category. Shares have a forward yield of 8.81%, with payouts increasing eleven years in a row. In short, consider CTO a REIT that could deliver outsized total returns (appreciation and dividends).
Gladstone Land (LAND)
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Recently, I named Gladstone Land (NASDAQ:LAND) one of the top monthly dividend stocks. While shares in this REIT aren’t the highest-yielding out there, LAND’s modest 5 cent monthly payout (giving the stock a forward yield of 3.94%) is more than made up for by another factor.
That would be the fact that LAND stock trades at a sharp discount to the underlying value of its farmland assets. A big reason for this discount has had to do with tenant vacancies and inadequate levels of income relative to its asset base, but as seen in the REITs latest quarterly results, these issues are waning.
Management believes it can resolve its vacancy issue within months, and recent lease agreements are helping to increase net operating income. Throw in the likely continued boost from falling interest rates, and 2024 could be a year of strong returns for LAND investors.
Modiv Industrial (MDV)
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Modiv Industrial (NYSE:MDV) is another of the top monthly dividend stocks listed in the above-referenced article that, like LAND, is one of the best REITs for 2024. This REIT focusses on owning single-tenant net-lease industrial properties.
Besides its monthly payouts (which give the shares a forward yield of 7.68%), what’s appealing with MDV stock is its potential for future earnings and dividend growth, which is likely to result in substantial price appreciation as well.
Last quarter, revental revenue increased by 21% year-over-year. Adjusted funds from operations (the REIT equivalent to adjusted earnings per share) increased 19% YoY. Modiv is also divesting non-core assets.
After selling several properties in exchange for a preferred shares in Generation Income Properties (NASDAQ:GIPR), the REIT is now converting these shares to common stock, distributing them to MDV shareholders later this month as a special dividend.
National Health Investors (NHI)
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National Health Investors (NYSE:NHI) is a healthcare REIT, focused mainly on owning senior housing and skilled nursing facility properties.
While a corporate spin-off of National Healthcare (NYSE:NHC) NHI has diversified its tenant concentration beyond its former parent over the past thirty-plus years.
NHC’s leases of NHI properties currently make up just 12% of overall revenue. NHI stock is an appealing choice for REIT investors, for two reasons. First, this REIT has a solid 6.68% forward dividend yield. Second, while growth is not expected to be high in the near-term, but it may be a different story down the road.
As I argued back in November, NHI is well-positioned to benefit from the “graying of America” trend. The growing senior population suggests improved outcomes for operators in the senior housing and skilled nursing industry. This may translate into growth and higher earnings/dividends for NHI shares.
NewLake Capital Partners (NLCP)
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NewLake Capital Partners (OTCMKTS:NLCP) could be best described as a “cannabis REIT.” That is, Newlake specializes in the ownership of real estate properties used in cultivation and dispensing of cannabis products. These properties are leased out to state-licensed cannabis producers/retailers on a triple-net basis.
There are many reasons NLCP stock is one of the best REITs for 2024. With a forward dividend yield of 9.64%, even without strong price appreciation, shares could produce solid gains. Newlake also last month increased its payout by 2.6%.
However, if interest rates do head lower, NewLake, like other interest rate-sensitive REITs, could experience a re-rating to the upside. Recent results and developments suggest issues like tenant non-payment may be on the wane. While a long-shot catalyst, any progress regarding reforms to U.S. Federal cannabis laws would also likely have an outsized positive impact on NLCP.
Sachem Capital (SACH)
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I’ve previously discussed Sachem Capital (NYSEAMERICAN:SACH) numerous times, in past coverage of both REIT stocks and penny stocks.
This low-priced mortgage REIT (focused on making short-term “hard money” loans to residential real estate investors) is another high-yielder (forward yield of 11.46%) with high potential upside.
While shares have experienced a strong rally in recent months, SACH stock still trades at a 24% discount to its book value. Given the uncertainty surrounding the residential real estate market, this makes sense. However, uncertainty could soon ease, if this year’s expected rate cuts result in a “soft landing” for the housing market.
If a “soft landing” takes shape, investors may become more willing to bid up Sachem to a price at or near par value. After treading water in 2023, 2024 may be the year that SACH both makes big payouts, and accrues big gains.
On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.
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