3 Top-Rated REITS for High Dividends and Growth Potential

Real Estate Investment Trusts, or REITs, are gaining traction among income-focused investors due to their ability to offer consistent dividends along with long-term growth prospects.

Thus, investors looking for high dividend yields may consider looking into American Tower Corporation (AMT), SBA Communications Corporation (SBAC), and Alexandria Real Estate Equities, Inc. (ARE), which are also poised to grow.  

In the current environment, cooling inflation and stabilizing interest rates provide a favorable atmosphere for REITs. Samuel Sahn, managing partner and portfolio manager at Hazelview Investments, believes that “macroeconomic conditions are taking a shift in the favor of interest rate-sensitive industries like REITs.” These conditions help REITs reduce borrowing costs, making it easier to expand their portfolios and enhance profitability.

Investors are particularly drawn to top-rated REITs that specialize in sectors like industrial properties, residential spaces, and data centers, each thriving in response to emerging market trends. Moreover, REITs provide diversification opportunities, which makes them less correlated. REITs can help maximize returns while balancing sector-specific risks.

The global REIT market is anticipated to grow by $350.20 billion by 2028, exhibiting a CAGR of 2.9%, showing a real positive REIT growth in the economy. REITs offer a compelling mix of income generation and capital appreciation.

Considering these conducive trends, let’s look at the fundamentals of the above-mentioned stocks in detail:

American Tower Corporation (AMT)

AMT owns, operates, and develops real estate for multitenant communications. Its primary business is leasing space on multitenant communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies, municipalities, and other industries. 

On October 25, AMT paid a quarterly cash distribution of $1.62 per share on its common stock. It has raised its dividends for 11 consecutive years. The company pays an annual dividend of $6.56, which translates to a yield of 2.91% at the current share price level, while its four-year average dividend yield is 2.58%.

Moreover, AMT’s dividend payments have grown at CAGRs of 9.3% and 12.7% over the past three and five years, respectively.

AMT’s total operating revenues for the fiscal second quarter that ended June 30, 2024, increased 4.6% year-over-year to $2.90 billion. The company’s operating income grew 47% from the year-ago quarter to $1.28 billion, while its attributable net income came in at $900.30 million, representing an increase of 89.3% from last year.

In addition, AFFO and AFFO per share attributable to AMT common stockholders stood at $1.31 billion and $2.79, up 13.5% and 13.4% year-over-year, respectively. Furthermore, its adjusted EBITDA rose 8.1% from the prior year’s period to $1.89 billion.

Street expects AMT’s FFO for the current year (ending December 2024) to increase 7% year-over-year to $10.56, while its revenue is estimated to reach $10.94 billion. Further, AMT topped the consensus FFO estimates in three of the trailing four quarters, which is promising.

Moreover, AMT’s revenue has grown at CAGRs of 9.7% and 8.3% over the past three and five years, respectively. In addition, its net income increased at 11.1% CAGR over the past five years.

The stock has gained 37.6% over the past year and 28.9% over the past six months to close the last trading session at $222.80.

AMT’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

AMT has a B grade for Growth, Momentum, Stability, and Quality. It is ranked #4 out of 44 stocks in the REITs - Diversified industry. Click here to see the additional ratings for AMT (Value and Sentiment).

SBA Communications Corporation (SBAC)

SBAC is a leading independent owner and operator of wireless communications infrastructure, including towers, buildings, rooftops, distributed antenna systems (DAS), and small cells. It operates through two segments: Domestic Site Leasing and International Site Leasing. 

On September 18, buoyed by its strong financial performance, SBAC paid its shareholders a quarterly dividend of $0.98 per share on its Class A Common Stock. It pays an annual dividend of $3.92, which translates to a yield of 1.62% at the current price level. The company’s four-year average dividend yield is 1.08%. Moreover, SBAC’s dividend payouts have grown at a CAGR of 59.3% over the past five years.

SBAC’s total revenues for the fiscal second quarter that ended June 30, 2024, amounted to $660.48 million, with a 1.2% year-over-year increase in its site leasing revenue.

Its operating income stood at $354.47 million, up 46.9% year-over-year, while its net income grew 30.4% from the year-ago value to $159.45 million. Moreover, the company’s AFFO and AFFO per share amounted to $354.33 million and $3.29, respectively, increasing 1.5% and 2.8% from the prior year’s period.

Analysts expect SBAC’s revenue and FFO for the current year (ending December 2024) to be $2.66 billion and $12.35, respectively. For the fiscal year 2025, both its revenue and FFO are expected to grow by 2% and 2.8% from the prior year to $2.71 billion and $12.70, respectively.

Over the past three and five years, SBAC’s operation income (EBIT) grew at CAGRs of 21.5% and 17.2%, respectively, while its diluted EPS grew at 33.1% CAGR over the past five years.

Over the past year, the stock has surged 23.6%, closing the last trading session at $241.79.

SBAC’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It also has a B grade for Growth, Momentum, and Quality. Within the REITs - Diversified industry, it is ranked #6 out of 44 stocks. Click here to see SBAC’s ratings for Value, Stability, and Sentiment.

Alexandria Real Estate Equities, Inc. (ARE)

ARE is a life science real estate investment trust that owns, operates, and develops collaborative life science, agricultural technology (ag-tech), and advanced technology mega campuses in AAA innovation cluster locations.

On October 15, the company paid its shareholders a quarterly dividend of $1.30 per common share. With 13 years of consecutive dividend growth, ARE pays an annual dividend of $5.20, which translates to a yield of 4.60% at the current price level. Moreover, its dividend payouts have grown at CAGRs of 5.2% and 5.5% over the past three and five years, respectively.

ARE’s revenues increased 10.9% year-over-year for the third quarter that ended September 30, 2024, to $791.61 million. Its net income grew 213% from the year-ago value to $213.60 million, while the investment income came in at $15.24 million compared to a year-ago net loss of $80.67 million. Also, its FFO and FFO per share came in at $407.87 million and $2.37, representing an increase of 5.5% and 4.9% year-over-year.

The consensus revenue estimate of $777.55 million for the fiscal fourth quarter (ending December 2024) represents a 2.7% increase year-over-year. The consensus FFO estimate of $2.39 for the same quarter indicates a 5% improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.

ARE’s revenue has grown at CAGRs of 15.4% and 15.9% over the past three and five years, respectively. Likewise, the company’s earnings from continued operations have increased at a CAGR of 23.4% over the past five years.

ARE’s stock has surged 22.9% over the past year to close the last trading session at $113.02.

ARE’s stance is reflected in its POWR Ratings. It has a B grade for Growth and Momentum.

It is ranked #2 out of 12 stocks in the REITs - Office industry. Click here to see the other ARE ratings for Value, Stability, Sentiment, and Quality.

What To Do Next?

Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:

3 Stocks to DOUBLE This Year >

AMT shares were trading at $222.40 per share on Monday afternoon, down $0.40 (-0.18%). Year-to-date, AMT has gained 5.57%, versus a 23.52% rise in the benchmark S&P 500 index during the same period.

More...