May brings with it a crescendo of new growth and the time for planting. It’s not a bad time to consider freshening up your stock portfolio, too, with some tried-and-true performers who have long been outstanding in their fields.
So, let’s consider a trio of real estate investment trusts (REITs) fit that bill. Each of these companies are the largest in their niche and, notably, are not just relying on their existing holdings to provide yield but are planting the seeds for future growth.
They are infrastructure REIT American Tower (NYSE: AMT), industrial REIT Prologis (NYSE: PLD), and retail REIT Realty Income (NYSE: O).
With a market cap of about $113 billion, Boston-based American Tower is the largest of all REITs, regardless of sector, and AMT just keeps growing, including the recent acquisition of 31,000 communications sites primarily in Germany and Spain from Telefonica (NYSE: TEF).
Our Matthew DiLallo dug deeper into that deal here: "American Tower Continues Its Global Domination."
That purchase gives this tower of power a portfolio of approximately 186,000 sites in "advanced, evolving, and developing wireless markets, in various stages of wireless network deployment." More than 100,000 tenants rely on this essential part of the company's service, including AT&T (NYSE: T), T-Mobile (NASDAQ: TMUS), and Verizon (NYSE: VZ). AMT stock was at $253.68 per share in late-day trading on April 30, about 7% below its 52-week high of $272.20 reached last July 29. It was yielding 1.98% based on an annual dividend yield of $4.96 per share. The company has grown its dividend every quarter from $0.21 in 1Q12 to $1.21 in 4Q20.
With a market cap of about $86 billion, Prologis is one of the largest of all REITs, too. The San Francisco-based company owns or co-owns approximately 990 million square feet of logistics space in 19 countries, with a tenant base of approximately 5,500 customers primarily in business-to-business and retail/online fulfillment.
Just like one of its major tenants – Amazon (NASDAQ: AMZN) – Prologis is looking to move beyond its traditional development base, buying a moribund Richmond, Virginia, mall that it reportedly plans to use for industrial, retail, and residential redevelopment.
Prologis stock was at $116.58 per share in late-day trading on April 30 after hitting its 52-week high of $116.71 earlier in the day. It was yielding 2.17% based on an annual dividend yield of $2.52 per share. Prologis paid its first dividend -- $0.134 per share -- in December 1997. Dipping only during the Great Recession, the payout has grown steadily and has been $0.58 per share each of the past four quarters, unwavering through the pandemic.
San Diego-based Realty Income has a market cap of about $26 billion, much smaller than the other two REITs we’re looking at here, but "The Monthly Dividend Company" -- as it calls itself -- has been living large for decades, providing a 15.2% average annual return since it went public 1994.
In that time, Realty Income has paid 609 consecutive monthly dividends and now boasts more than 6,500 properties under long-term net-lease agreements with more than 600 different clients in 51 retail and other industries.
One of the most well-covered of all REITs, Realty Income just this week made headlines with the April 29 announcement that was acquiring rival VEREIT (NYSE: VER) in an all-stock deal that will create a single company with an enterprise value of $50 billion.
Our Matt Frankel parses out that deal for Millionacres readers in this: "Realty Income to Acquire VEREIT: What Investors Need to Know."
Realty Income stock was at $69.25 per share in late-day trading on April 30 after hitting its 52-week high of $71.84 the day before. It was yielding 4.07% based on an annual dividend yield of $2.82 per share.
The Millionacres bottom line
The confidence in the stability of these three REITs shows in how little they’re shorted and how much of their stock is held by institutions. As of April 30, AMT was 90.12% held by institutions and only 0.62% shorted. Prologis was at 94.66% and 0.97%, respectively, and Realty Income was at 67.83% and 3.41% (lower and higher than the other two but, remember, retail has been a particularly hard-hit sector during the pandemic).
All things considered, AMT, Prologis, and Realty Income are blue chips among REITs and publicly traded equities in general because of their long records of rewarding investors with income and growth. They also are investing in themselves while strengthening their positions as providers of essential infrastructure in the form of occupiable real estate for clients in essential retail, telecommunications, and logistics activities.
Like "beauty," "best" is also in the eye of the beholder, but each of these issues deserve attention as buy-and-holds this spring and for seasons to come.