The market's a bit choppy right now, and who knows which way it's going to go, right? Investors who don't like rough rides have long looked to real estate investment trusts (REITs) to both provide income and some price stability, if not growth.
Of course, "best" is in the eye of the beholder -- and there are plenty of REITs that get into trouble -- but in times like these, one can probably do worse than looking to operators that are masters of their realm and dominate their niche, especially when those niches are really big.
So, if you're worried about March going out like a lion (or a bear), consider these three: Alexandria Real Estate Equities (NYSE: ARE), American Tower (NYSE: AMT), and Prologis (NYSE: PLD).
Alexandria Real Estate Equities
Alexandria Real Estate Equities (ARE) lays claim to being the nation's first and largest owner and operator of life sciences property, and that sector is getting larger. Now in business for 27 years, the San Diego-based firm has significant market presence in and around innovation centers in greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and North Carolina's Research Triangle.
Demand for this kind of office space was rising before the pandemic, and now it's hit an even higher gear, providing real estate for a "who's who" of major pharmaceutical and other life sciences operations. This includes all three makers of the COVID-19 vaccines currently in the U.S. market: Moderna (NASDAQ: MRNA), Pfizer (NYSE: PFE), and Johnson & Johnson (NYSE: JNJ).
ARE stock was trading at $163.78 a share at midafternoon on March 9, still 8.9% off its 52-week high of $179.79 reached on Dec. 17. That gave it a market cap of $22.2 billion and a yield of 2.72% based on a 12-month dividend payout of $4.36 per share.
American Tower (AMT) is the 800-pound gorilla in the mobile tower vertical, a go-go business that's likely to only get even more oomph with the global rollout of 5G networks. At last count, the 26-year-old, Boston-based REIT boasted a portfolio of approximately 186,000 communications sites, including approximately 43,000 in the United States and more than 142,000 abroad.
Here's how big AMT is: It is the largest REIT by equity market cap, at over $100 billion, well ahead of the second-largest, Prologis (more on that company below), and bigger than the equity market caps of several other entire REIT subgroups. A long history of market performance and stakes in major markets here and around the world give this company stability for investors who like to sleep at night.
AMT stock was trading at $203.97 a share midafternoon on March 9, still 17.01% off its 52-week high of $272.20 reached on July 29. That gave it a market cap of $90.6 billion and a yield of 2.50% based on a 12-month dividend payout of $4.96 per share.
Prologis is the largest of the industrial REITs. The 38-year-old, San Francisco-based operation has interest or ownership in 4,703 logistics and warehouse buildings in 19 countries. An estimated $2.2 trillion of economic goods flow through one of Prologis' distribution centers each year, accounting for 2.5% of global GDP. E-commerce is no longer a trend -- its continued growth is a fact of life, it seems safe to assume. Prologis has among its tenants some of the prime providers of that service, including FedEx (NYSE: FDX) and Amazon (NASDAQ: AMZN), as well as brick-and-mortar stalwarts Walmart (NYSE: WMT) and Home Depot (NYSE: HD). These are companies that sign long-term leases and reliably pay their rent.
Prologis stock was trading at $99.16 at midafternoon on March 9, still 11.76% off its 52-week high of $112.37 reached on Nov. 9. That gave it a market cap of $73.4 billion and a yield of 2.63% based on a 12-month dividend payout of $2.52 per share.
The Millionacres bottom line
There's actually some diversity in these three REITs. ARE is considered an office REIT, AMT is an infrastructure REIT, and Prologis belongs to the industrial REIT crowd. What they do have in common is a long history of market and dividend growth, dominant positions as providers of critical space and infrastructure, and they're all currently below 52-week highs that history says they're likely to reach and exceed again.
Plus, again, that payout. Massive client bases full of major corporate names that depend on this space to do their own thing means reliable rent flow, which means taxable income to pass on to stockholders, as REITs are required to do.
Indeed, when the Ides of March blow, that's when sometimes bigger is best.