If you’ve ever wanted to invest in real estate without actually having to own physical property or act as a landlord, Real Estate Investment Trusts, or REITs, should definitely be on your radar. These are investment vehicles that offer exposure to certain areas of the real estate market, provide consistent income in the form of dividends, and are a great way to diversify your portfolio holdings. They can even be used to hedge against inflation and help investors to take advantage of tax benefits since many of these companies pay zero corporate tax.
It’s quite evident that REITs can turn into fantastic long-term investments and provide steady income to investors over the years, which is why it’s a good idea to track some of the best names in the sector. This is particularly true given the inflation concerns present in financial markets today. Keep reading on below for an overview of 3 rewarding REITs to buy now.
1. Digtal Realty Trust
Cloud computing has certainly taken the investing world by storm over the last few years, and the fact that Digital Realty Trust (NYSE:DLR) provides data center, co-location, and interconnection solutions for domestic and international tenants makes it a very intriguing way to play this exciting technology.
Data centers are important for a variety of reasons, as many companies rely on them to collect, store, and process all of their data along with providing backup and networking solutions. These centers also support cloud storage applications and e-commerce transactions, and since almost every business today relies on them in some capacity, it's easy to recognize the potential of Digital Realty Trust.
This REIT offers a 2.85% dividend yield and has raised its dividend for 16 consecutive years, which is another great reason to consider adding shares. The company recently reported Q2 earnings that saw Digital Realty Trust’s revenue increase by 10% year-over-year to $1.1 billion, a sign that data centers are still attracting plenty of interest from enterprises. Management also increased the company’s revenue and adjusted EBITDA estimates for the year, which is a great indication that the REIT will finish the year on a bright note.
2. American Tower Corp
Next, we have a REIT that towers above a lot of the competition and continues to hit new all-time highs in 2021. American Tower Corp (NYSE:AMT) owns, operates, and develops multitenant communications real estate, which makes it a fantastic way to gain exposure to the ongoing 5G revolution. This is a great example of how REITs can offer exposure to certain lucrative areas of the real estate market with tons of growth potential, and the tower business is one of the most attractive segments to look at for a few reasons.
Wireless carriers tend to agree to long-term leases with American Tower that include rent escalators, which essentially deliver steady revenue increases for the company over time. With the way that data usage is increasing at a near exponential rate, American Tower’s space is certainly seeing heavy demand.
Also, there is plenty of upside for the company in international markets, where heavy wireless network investment will likely occur in order to keep up with the rapid adoption of 4G and 5G technology. The bottom line here is that American Tower is a market-leading provider of the towers that power many of the most popular devices today, which makes it a top pick for investors looking for the best REITs.
3. CubeSmart
Another strong area of the real estate market to look at for long-term gains is self-storage facilities. These are properties that offer affordable, accessible, and secure storage space for customers, which is very attractive given that so many people are rethinking their living situations following the pandemic.
CubeSmart is one of the top three owners and operators of these facilities in the United States, with over 1200 locations nationwide. It has heavy exposure to the New York City market as well, which is a plus because we know how tight space is for many people living in the Big Apple.
This REIT offers investors a 2.67% dividend yield and is a company that should be getting more attention, particularly since the stock has rallied over 53% year-to-date. CubeSmart (NYSE:CUBE) recently reported strong Q2 earnings that saw same-store revenue grow by 14% year-over-year.
The company has also been actively increasing its rates, which should help CubeSmart generate even stronger financial results over the long term. This is certainly a rewarding REIT to consider buying now, especially since May through September are the strongest seasonal months for the company.