Investing in real estate has always been considered a great way to build long-term wealth. Unfortunately, investing in real estate takes a lot of capital and could require you to dedicate personal time and resources to manage the assets. For those that would like to invest in real estate without the hassle, investing in the stock of a Real Estate Investment Trust, or REIT, would be a great option. There are three REIT stocks to consider investing in during 2021.
For the past decade, Equity Residential (EQR) has been a leading multi-family REIT and is one of the best REITs for 2021. According to Money Morning, “This is one of the best and largest “triple net lease” REITs. Its portfolio of net leases consists of 1,215 properties, comprising 142 million square feet leased to 351 tenants, with a weighted-average lease term of 10.6 years and an occupancy rate of 98.9%.” This company owns over 75,000 apartment units located in some of the premier markets across the country including New York, Boston and San Francisco. A concern that many had was that the COVID-19 pandemic would lead to a reduction in occupancy and collection rates. However, the company has performed well during this time by collecting over 97% of expected rents.
With a share price of under $60 as of January 2021, there is a lot of potential for an increase. Prior to the pandemic, the per-share price was over $85 per share. Further, the company has remained strong as occupancy rates still are around 95% despite the pandemic and political unrest in some major cities.
There have continued to be a lot of concerns for REITs that are in certain asset classes. One asset class that has been less impacted than others is the industrial space. A leader in this industry has continued to be WP Carey, which trades under the ticker symbol WPC. This company is a leader in the REIT industry due to its strong tenant and site selection and diversification. The company focuses on doing triple-net leases with quality credit tenants.
While many REITs have struggled to stay occupied, WP Carey has a global occupancy rate of nearly 99% and they have collected nearly 98% of expected rents. These strong metrics have allowed them to pass on additional cash to shareholders. Their total dividend yield is around 6.2%, which is more than twice the dividend paid out by their competition.
One REIT that saw a decline in stock price during 2020 was Brookfield Property, which has a diversified real estate holding. They invest in restaurants, parking garages, malls, and other investments that have struggled. While this would offer concern to some investors, the hope of a vaccine rollout should improve occupancy and collection rates. This could allow the share price to increase back to where it was in early 2020, which could provide a good investment return. If this does occur, an investor would yield a 20%+ return on top of any additional income that is made through dividends during the investment period.