Each investor buys shares of real estate investment trusts (REITs) for reasons of their own, and those who do for income only have different criteria than those seeking primarily stock price appreciation. And then there are those looking for both in the form of total return.
Income seekers, for instance, should pay more attention to dividends per share, which don’t change when the stock price changes, unlike yield. Those most interested in stock-price appreciation don’t have to pay as much attention to yield and dividends per share, but they also might not be as interested in a long-term hold. Total return, meanwhile, is a way to look at both those factors.
REITs encompass nearly every kind of commercial real estate out there. Here we’ll consider industrial REITs, a broad category itself that includes traditional warehouses, self-storage, and e-commerce fulfillment facilities of multiple shapes and sizes whose tenants include everyone from families on the move to the world’s largest retailers.
And, to celebrate the very merry month of May, let’s take a look at some industrial REITs that could help your portfolio flower.
There are many ways to slice this pie. Nareit puts 13 industrial REITs in its basket, and they averaged a dividend yield of 2.51% as of March 31, with a total return of 6.33% at that point and a 2020 total return of 12.17%.
For this article, let’s look at the top three ranked by total return in that REIT list.
Top 3 REITs ranked by mid-April one-year total return
They are Plymouth Industrial REIT (NYSE: PLYM) with a one-year total return of 68.99% as of April 16, Monmouth Real Estate Investment (NYSE: MNR) with a one-year total return of 56.03%, and Industrial Logistics Properties Trust (NYSE: ILPT) with a one-year total return of 50.83%.
Our Matthew DiLallo did a head-to-head comparison of Plymouth Industrial and Monmouth Real Estate last month and a look at Industrial Logistics Properties last December.
Here’s a look at each of these three now.
Plymouth Industrial REIT
Boston-based Plymouth Industrial REIT went public with a $55 million IPO in 2017 and now has a market cap of about $517 million. Its portfolio now contains 173 buildings containing over 26 million square feet in 15 primary and secondary markets.
Plymouth Industrial’s focus is on single- and multi-tenant industrial properties, including distribution centers, warehouses, light industrial, and small-bay properties located in the nation’s primary industrial, distribution, and logistics corridors.
Plymouth Industrial stock was trading mid-day April 28 at $18.03 a share, a shade below its 52-week high of $18.07 on April 22. An annual dividend of $0.80 per share -- based on four consecutive quarters of $0.20 per share payouts -- gave it a respectable yield of 4.44%.
That’s despite cutting its dividend almost in half from $0.375 a share it had paid each quarter since 3Q17. That handsome total return comes from the recovery, too, of its stock price from a 52-week low of $10.79 on May 14, 2020.
Monmouth Real Estate Investment
Based in Holmdel, New Jersey, Monmouth Real Estate Investment has been around since 1968 and currently has 121 buildings in 31 states, with 24.6 million square feet that’s 99.7% occupied with a net lease tenant base the company says is 82% investment grade.
The company says its buildings enjoy an average weighted age of less than 10 years and are in what it calls business-friendly locations near major airports, major transportation hubs, and manufacturing plants that are vital to its tenant’s operations.
"We have also strategically positioned our portfolio to benefit from the recently completed Panama Canal expansion. Shipping container growth at U.S. East Coast ports has been outpacing growth on the West Coast ports for the past several years. Our portfolio is very well situated to continue to benefit from these ongoing trends," the company says on its website.
Monmouth also boasts a 20-year total shareholder return of 1,248%, which it says makes it 17th of all performers and second among industrial REITs as of Dec. 31.
Monmouth stock closed on May 7 at $19.49 a share, right at the 52-week high of $19.50 it hit earlier in the day. An annual dividend of $0.72 per share gave Monmouth a yield of 3.69%.
Editors Note: Since this article was initially published on April 29, Equity Commonwealth (NYSE: EQC) and Monmouth announced the latter would be sold to the former in an all-stock deal valued at approximately $3.4 billion.
Industrial Logistics Properties Trust
Industrial Logistics Properties has only been around in its current form since 2018, when it was spun off by what is now Office Properties Income Trust (NASDAQ: OPI). Based in the Boston suburb of Newton, Massachusetts, ILPT owns and leases 289 properties encompassing 35 million square feet that’s currently 98.6% occupied.
Interestingly, while it has 253 tenants and properties in 31 states, about 50% of ILPT’s rental revenue comes from its Hawaii operations. The company does say that rent resets there have averaged 30% since 2003 and that it’s continuing a disciplined acquisition strategy that’s focusing on top-30 U.S. industrial markets and e-commerce facilities. (There’s an Amazon fulfillment center on its home page.)
Industrial Logistics was trading mid-day April 28 at $24.50 a share, a couple bucks off its 52-week high of $26.20 on April 16. An annual dividend of $1.32 per share yields a respectable 5.44%. ILPT paid its first dividend of $0.27 a share in May 2018 and has since then paid $0.33 every quarter without fail.
The Millionacres bottom line
Plymouth Industrial REIT, Monmouth Real Estate Investment, and Industrial Logistics Properties Trust each provide decent yield versus the greater market for income investments, and they have stock-price growth prospects that could continue given their solid business models, especially if you’re in it for the longer haul.
Those factors make each of these a good consideration for a May investment.