Top Real Estate Stocks To Invest In

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The holidays are approaching, and it’s a good time to buy stocks that you think will help you achieve your financial goals for years to come. I’m not talking about exponential growth stocks. Let’s look at something more complex: real estate stocks that pay you dividends while letting others manage the real estate.

Top Real Estate Stocks To Invest In

Top Real Estate Stocks To Invest In

Real estate investment trusts (REITs) are just a means of passive income. They have a long track record of providing strong total returns, joining bonds as a popular choice for conservative investments in long-term portfolios.

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I own two dozen REITs, and three of my favorites right now are Agree Realty (ADC -0.71%), Getty Realty (GTY -1.68%) and Gladstone Commercial (GOOD -1.52%). While Getty leases to auto companies such as gas stations and parts stores, Agree focuses on retail properties, especially big box stores. Gladstone owns a mix of industrial and office properties.

Each of these real estate funds has its own proven strategy that makes them an attractive investment. Agree, for one, has kept its holdings at nearly 100% occupancy during a difficult period for general brick-and-mortar retail, and is growing its portfolio — and revenue — at a record pace.

Getty, meanwhile, is in a recession-proof, inflation-proof special. People will continue to buy gas, and the combination of sale and leaseback arrangements, new property developments and redevelopment gives him the flexibility to take advantage of opportunities when they see them.

Gladstone is part of the David Gladstone Group of Real Estate Investment Trusts, which manages its properties to provide retirement income on a fixed monthly basis. Gladstone Commercial, for its part, is focusing on industrial real estate over its struggling office space business. The CEO recently said that all 15 potential acquisitions are in this hot sector.

What Are Stocks?

Gladstone has been paying out a monthly dividend since shortly after its 2003 initial public offering, while Agree started paying out monthly last year and Getty is still paying out quarterly. The chart below shows how these three trusts have fared against the Vanguard Real Estate ETF in total return over the past 10 years.

Dividends make up a large portion of total income. After all, REITs are required by tax law to pay out at least 90% of their taxable income to shareholders. The chart below shows each of these REITs’ consistent dividend yield paid to shareholders over the same 10-year period.

At the same time, as you can see below, every company — especially I agree — has been steadily increasing its funds from operations (FFO, a key measure of a REIT’s earnings). Their payout ratios are at levels that can support increased dividends and buybacks for their investment portfolios. Based on current cash flow, they stand at 82% for Agree, 80% for Gladstone, and 70% for Getty.

Top Real Estate Stocks To Invest In

As for growth, in the last quarter alone Agree added 121 net rental properties to give a total portfolio of more than 1,700 locations across all 48 contiguous states. Getty invested in 10 properties in the third quarter of ’22 and has 1,021 properties in 38 states. Gladstone has 136 properties spread across 27 states, adding four industrial properties and selling three office properties in the third quarter.

Why Invest In Reits?

They are also currently selling at low prices. Of the three, Agree has the highest price-to-FFO ratio per share at a reasonable 17, followed by Getty at around 11 times and Gladstone at around 10 times. This is after the three of them participated in the recent market rally.

For example, in the past month, Agree shares are up about 9.5%, Getty about 17.3% and Gladstone about 19%. But they’re still down year-over-year: about 6% agree, compared to Getty’s around 1% and Gladstone’s 28%.

Each has a balance sheet and payment tendencies that I’m sure will thank me for having a place in my investment portfolio for years to come.

Mark Roth holds positions at Agree Realty, Getty Realty, Gladstone Commercial and the Vanguard Real Estate ETF. The Motley Fool owns and recommends positions in the Vanguard Real Estate ETF. The Motley’s has a disclosure policy.

Benefits Of Investing In Real Estate

Getty Realty GTY $35.16 (-1.68%) $0.60 Gladstone Good Trade $12.02 (-1.52%) $0.18 Vanguard Specialty Funds – Vanguard Real Estate ETF VNQ $81.66 (-1.14%) $0.94

12% to 27% Dividend Shares Look Like Great Buys In March If You Invested $1,000 In Agree Realty In 2008 Your Dividend (ADC) Today In Q4 2022 What Would It Be? Can Unstoppable Dividend Stock Boost Your Portfolio Like Winners? These three dividend machines consistently beat the Dow

81% of Carl Icahn’s portfolio is invested in these two stocks. If you invested $10,000 in Apple stock in 2013, you would have 3 incredibly safe stocks today that could turn $400,000 into $1 million by 2030.

Top Real Estate Stocks To Invest In

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance and more from The Motley Fool’s premium services. Many investors have traditionally turned to the stock market to place their investment dollars. While stocks are a well-known investment option, not everyone knows that buying real estate is also considered an investment. Under the right circumstances, real estate can be an alternative to stocks, offering lower risk, better returns, and greater diversification.

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Whether planning for retirement, saving for a college fund, or building residual income, individuals need an investment strategy that fits their budget and needs. Comparing real estate investing to buying stocks is a good place to start.

Investing in real estate or stocks is a personal choice based on your financial situation, risk tolerance, goals and investment style. It can be assumed that more people are investing in the stock market, perhaps because it does not take much time or money to buy stocks. If you are buying real estate, you will have to save and spend a large amount of money.

When you buy a stock, you are buying a small part of that company. Generally speaking, you can make money from stocks in two ways: appreciation as the company’s stock goes up, and dividends.

When you buy real estate, you are acquiring land or physical property. Most real estate investors make money by collecting rent (which can provide a steady stream of income) and by appreciating the property as it increases in value. Also, since real estate can be leveraged, it is possible to expand your holdings even if you cannot pay cash outright.

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For many potential investors, real estate is attractive because it is a tangible asset that can be managed with the added advantage of diversification. Real estate investors who buy real estate own something specific and can be held accountable for it. Note that real estate investment trusts (REITs) are a vehicle for investing in real estate and they trade like stocks.

There are a number of considerations for investors when choosing between investing in stocks or purchasing real estate as an investment.

Investing in the stock market makes more sense when combined with benefits that increase your income, such as a 401(k) company match. However, these benefits are not always available and there is a limit to how much you can take advantage of. Investing in the stock market independently can be unpredictable and the return on investment (ROI) is often lower than expected.

Top Real Estate Stocks To Invest In

Comparing real estate and stock market returns is comparing apples and oranges — the factors that affect prices, values, and returns are very different. However, we can get a general idea by comparing the SPDR S&P 500 ETF (SPY) and Vanguard Real Estate ETF Total Return (VNQ) over the past 17 years:

Reasons Why Real Estate Is A Great Investment

As the chart shows, both real estate and stocks can take a hit during economic downturns. Consider the Great Recession of 2008 and the Great Recession during the COVID-19 crisis of 2020.

The housing bubble and banking crisis of 2008 depressed value for investors in the real estate and stock markets, and the COVID-19 crisis is repeating it again, albeit for different reasons. Again, it’s important to remember that stocks and real estate generally have very different risks.

Here are some things to consider when it comes to real estate and the risks involved. The biggest risk that people miss is that real estate requires a lot of research. This is not something you can casually jump into and expect immediate results and income. Real estate is not an asset that is easily liquidated and cannot be disbursed quickly. This means that you will not be able to cash them in when you have to.

For home swimmers or those with rental properties, there are risks involved in managing repairs or rentals. Some of the major problems you will face are costs, not to mention

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