3 Sizzling Dividend Stocks Wall Street Is Sleeping On

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In most years, a stock up around 10% over three months would not count as a sizzle. But in a year when many growth stocks are down 60%, 70% or even 80%, and the majority of REITs are down 30% or more, having a level of momentum is impressive.

These three REITs, Accept real estate (CAN 1.82%), Omega Health Investors (IHO 2.05%)and WP Carey (WPC 2.89%), have all shown strength where the rest of the industry has not, and each has a strong dividend yield (the lowest of the three is 3.8%). Let’s talk about their prospects and whether the actions are just beginning.

1. Accept real estate

Agree Realty is a retail REIT that owns 1,510 properties in 47 states. Properties are primarily big box retailers – 9.9% of properties are leased by grocery stores, 9.4% by home improvement warehouses and the remainder by various other retailers. Agree also owns 186 properties (included in the 1,510 total) that are leased on the ground to the same types of retailers. This means that Agree owns the land and the retailer or other business owns the building and leases the land.

The title of agreement is up nearly 5% over the year. Normally this comeback would be lackluster, but in 2022 it’s being called a sizzle in its own right. So what drove the stock price this year?

It’s a combination of big performance and aggressive expansion. Agree reported strong fourth quarter 2021 and first quarter 2022 results and announced in a recent investor presentation that it would acquire $1.4 billion to $1.6 billion in new properties in 2022, an increase in acquisitions for the eighth consecutive year.

Meanwhile, it pays a consistent monthly dividend yield of 3.8%, has a strong balance sheet with nearly twice as much equity as debt, and revenue has grown more than 300% since 2016. There has pretty good reasons why Agree has provided steady returns even this year, and it will likely continue to do so in the future.

2. Omega Healthcare Investors

Healthcare REITs are traditionally portrayed as recession-proof. Health care has inelastic demand – that is, customers or patients will generally pay what it takes – so health care providers and their owners must be resilient to short-term economic problems. term and inflation. Despite this theory, many healthcare REITs have fallen 30% or more this year. Not the Omega Healthcare investors.

Omega is up around 3% on the year and almost 10% over the past month. Part of the reason for Omega’s resilience this year is its massive dividend yield. Currently, the stock is yielding more than 9%. It’s hard to sell a stock if you can count on a 9% dividend to boost your returns. The question is whether this dividend payment is reliable.

Omega Healthcare owns and leases nursing homes. Its business was hit hard at the start of the pandemic. Occupancy fell by 13% from 2020 to 2021. 15% of its tenants were unable to meet their full contractual obligation in 2021. Omega chose to work with its operators and, in April 2022, it had collected 91% of its rent and mortgage obligations.

Omega has not cut its dividend since October 2003. The market had already priced in some skepticism that the REIT would continue to make heavy payouts to shareholders, but the strength of its balance sheet and its discipline helped maintain the dividends. If they can hold it going forward, expect the stock to react.

3. WP Carey

WP Carey’s stock was little changed over the year. Of course, if you include its annualized dividend of 5.13%, the total return is close to 5%. Again, this is well above the low yields of the S&P500 and the REIT sector. Like the other two REITs, WP Carey has a long history of paying dividends. In fact, it has increased its dividend every year since 1998.

WP Carey is a diversified REIT specializing in long-term net leases in the United States and Northern and Western Europe. It owns 1,304 properties, and they are rented to 352 different tenants in 24 different countries. Approximately 35% of properties are located outside of the United States

The strength of WP Carey’s stock is likely due to his incredible dividend regularity. It owes this consistency of the dividend to its internal diversification. Its highest ownership type concentration is industrial at just 25.8%. Its largest tenant industry is retail stores with just 21.9%. And while 65% of its leases are in the United States, those are spread across the country and there is no material concentration of tenants.

In addition, the REIT has contractual rent increases built into 99% of its leases, 58% of which are based on the consumer price index. And remember, he specializes in net leases. This means the tenant pays all variable costs like utilities, taxes and maintenance. While inflation rages, its costs stay about the same and its rents go up. If you put “safe REIT” into a search engine, WP Carey would be the result.

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