Actual property funding trusts, or REITs, are a beautiful funding choice amid the continued turmoil. REITs generate regular money flows by way of rental earnings. They’re required to return a minimal of 90% of taxable earnings within the type of dividends, making them engaging for income-oriented traders. We are going to focus on three REITs – VICI Properties (NYSE:VICI), Actuality Earnings (NYSE:O), and Iron Mountain (NYSE:IRM) – and use TipRanks’ Inventory Comparability Software to select the one that may generate the very best returns.
VICI Properties (VICI)
VICI Properties boasts one of many largest portfolios of gaming, hospitality, and leisure properties, together with Caesars Palace Las Vegas and MGM Grand. The corporate’s triple web leases with the best-in-class tenants assured 100% hire assortment in the course of the COVID-19 pandemic. Underneath triple web leases, the tenant is answerable for paying all property bills associated to ongoing upkeep and operation, together with taxes and insurance coverage.
This week, VICI reported its third-quarter outcomes. Income grew 100% year-over-year to $751.5 million, whereas adjusted funds from operations (AFFO) per share elevated 8.5% to $0.49. Outcomes mirrored the affect of the corporate’s acquisitions of MGM Progress Properties LLC and the land and actual property belongings of the Venetian Resort Las Vegas. VICI barely revised its 2022 AFFO per share steerage to the vary of $1.91 to $1.92, from the prior steerage vary of $1.89 to $1.92.
Final month, VICI elevated its quarterly dividend per share by 8.3% to $0.39. The corporate provides an annual dividend yield of 4.79%.
Is VICI a Good Inventory to Purchase?
Following the Q3 outcomes, Deutsche Financial institution analyst Carlo Santarelli reiterated a Purchase ranking on VICI inventory however minimize his value goal to $37 from $39 to replicate a decrease goal valuation a number of. Santarelli believes that within the ongoing setting, VICI is “extra compelling” for REIT traders primarily based on the historic stability of the rental funds.
VICI Properties inventory scores the Road’s Sturdy Purchase consensus ranking primarily based on 10 unanimous Buys. The typical VICI inventory value goal of $36.43 implies 13.4% upside potential. Shares have risen 6.7% year-to-date.
Realty Earnings (O)
Realty Earnings’s portfolio contains 11,427 properties positioned throughout 50 U.S. states, Puerto Rico, the U.Okay., and Spain. It primarily focuses on single-unit freestanding business properties underneath long-term, web lease agreements with main international operators, like Walgreens (WBA), Greenback Normal (DG), Greenback Tree (DLTR), and FedEx (FDX).
Realty continues to strengthen its portfolio by way of acquisitions of high-quality actual property. After investing greater than $3.2 billion within the first half of 2022, the corporate elevated its full-year acquisition steerage to over $6 billion.
Also called “The Month-to-month Dividend Firm,” Realty lately declared its 628th consecutive month-to-month dividend ($0.25) and has elevated its dividend 117 instances because it was publicly listed in 1994. This dividend aristocrat’s annual dividend yield stands at 4.87%.
Realty Earnings is well-positioned to help its engaging dividends. In Q2, the corporate’s AFFO per share elevated 10.2% to $0.97.
What’s the Goal Worth for Realty Earnings?
Just lately, Mizuho analyst Haendel St. Juste downgraded Realty Earnings inventory to a Maintain from Purchase and lowered the worth goal to $61 from $76. The analyst cited decrease funding spreads relative to friends, excessive acquisition expectations, and elevated forex headwinds as the explanations for his ranking revision.
Total, the Road is cautiously optimistic about Realty Earnings inventory, with a Average Purchase consensus ranking primarily based on seven Buys and three Holds. The typical Realty Earnings inventory value goal of $70.85 implies about 14% upside potential. Shares have declined 13% year-to-date.
Iron Mountain (IRM)
Iron Mountain is a specialised REIT that gives storage and knowledge administration providers. Its actual property community contains practically 1,380 services in 59 nations (as of Q2-end). Its in depth vary of providers contains digital transformation, knowledge facilities, safe document storage, data administration, artwork storage and logistics, and asset lifecycle administration.
In Q2, Iron Mountain’s income elevated 15.2% to $1.29 billion. The corporate’s storage rental income accounted for 58.4% of the general Q2 income, whereas service income contributed the remaining. Notably, the corporate’s service income is rising at a quicker charge than its storage rental income. AFFO per share grew 9.4% to $0.93.
The corporate expects full-year income development within the vary of 14%-17% and AFFO per share development of 6% to 10%.
At its Investor Day occasion held in September, Iron Mountain revealed that it intends to develop its income at a CAGR of about 10% to $7.3 billion in 2026. The corporate expects $4 billion of capital expenditure over 2023-2026 to help its development plan.
With a quarterly dividend per share of $0.62, the corporate’s annual dividend yield stands at 5.02%.
Is IRM a Purchase?
Iron Mountain earns the Road’s Sturdy Purchase consensus ranking primarily based on 4 unanimous Buys. The typical Iron Mountain inventory value prediction of $60.50 implies practically 21% upside potential. IRM inventory has declined 4.2% up to now this 12 months.
Conclusion
The three REITs we mentioned supply comparable dividend yields. Nonetheless, at the moment, Wall Road sees larger upside potential in Iron Mountain inventory than in VICI Properties and Realty Earnings.
Not like the opposite two REITs, Iron Mountain just isn’t recognized for dividend will increase. The corporate is investing aggressively in its development initiatives. Given the fast digitization and transition to the cloud, the robust demand for knowledge facilities is predicted to drive Iron Mountain’s future development.
