Actual property funding trusts, or REITs, are a lovely funding choice amid the continued turmoil. REITs generate regular money flows by way of rental revenue. They’re required to return a minimal of 90% of taxable revenue within the type of dividends, making them engaging for income-oriented buyers. We’ll focus on three REITs – VICI Properties (NYSE:VICI), Actuality Revenue (NYSE:O), and Iron Mountain (NYSE:IRM) – and use TipRanks’ Stock Comparison Tool to choose the one that may generate one of the 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% lease assortment throughout the COVID-19 pandemic. Below triple web leases, the tenant is liable 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 Development Properties LLC and the land and actual property property of the Venetian Resort Las Vegas. VICI barely revised its 2022 AFFO per share steering to the vary of $1.91 to $1.92, from the prior steering 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 score on VICI inventory however reduce his worth goal to $37 from $39 to mirror a decrease goal valuation a number of. Santarelli believes that within the ongoing setting, VICI is “extra compelling” for REIT buyers primarily based on the historic stability of the rental funds.
VICI Properties inventory scores the Road’s Robust Purchase consensus score primarily based on 10 unanimous Buys. The common VICI inventory worth goal of $36.43 implies 13.4% upside potential. Shares have risen 6.7% year-to-date.
Realty Revenue (O)
Realty Revenue’s portfolio consists of 11,427 properties positioned throughout 50 U.S. states, Puerto Rico, the U.Ok., and Spain. It primarily focuses on single-unit freestanding industrial 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 steering 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 Revenue is well-positioned to assist its engaging dividends. In Q2, the corporate’s AFFO per share elevated 10.2% to $0.97.
What’s the Goal Value for Realty Revenue?
Lately, Mizuho analyst Haendel St. Juste downgraded Realty Revenue 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 score revision.
General, the Road is cautiously optimistic about Realty Revenue inventory, with a Average Purchase consensus score primarily based on seven Buys and three Holds. The common Realty Revenue inventory worth 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 data administration providers. Its actual property community includes practically 1,380 amenities in 59 nations (as of Q2-end). Its in depth vary of providers consists of digital transformation, information facilities, safe file storage, info 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 sooner price than its storage rental income. AFFO per share grew 9.4% to $0.93.
The corporate expects full-year income progress within the vary of 14%-17% and AFFO per share progress 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 assist its progress 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 Robust Purchase consensus score primarily based on 4 unanimous Buys. The common Iron Mountain inventory worth prediction of $60.50 implies practically 21% upside potential. IRM inventory has declined 4.2% thus far this 12 months.
The three REITs we mentioned supply comparable dividend yields. Nevertheless, at the moment, Wall Road sees increased upside potential in Iron Mountain inventory than in VICI Properties and Realty Revenue.
Not like the opposite two REITs, Iron Mountain is just not identified for dividend will increase. The corporate is investing aggressively in its progress initiatives. Given the speedy digitization and transition to the cloud, the sturdy demand for information facilities is anticipated to drive Iron Mountain’s future progress.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.