REITs, or real estate investment trusts, own, operate or finance income-producing properties. Due to their dynamics, they are strong performers in inflationary and recessionary environments. Although inflation eased for the second successive month in November, the fight against inflation is far from over, with the Fed raising the benchmark interest rate to the highest level in 15 years and hinting at continued increases through 2023.
As inflation remains elevated, REITs can increase rents and then pass that income on to shareholders as dividends. With the Fed indicating that it will raise the interest rates through next year, a recession might be on the cards. Therefore, investors could cushion their portfolios by adding fundamentally strong REITs.
We think fundamentally strong diversified REITs Alliance Global Group, Inc. (ALGGY), The GEO Group, Inc. (GEO), and One Liberty Properties, Inc. (OLP) are solid additions to one’s portfolio now.
Alliance Global Group, Inc. (ALGGY)
Based in Quezon City, the Philippines, ALGGY engages in real estate development, tourism entertainment, gaming, food and beverage, quick-service restaurant, and infrastructure development businesses in the Philippines and internationally. The company operates through Megaworld, Emperador, Travellers, and GADC segments.
ALGGY’s four-year average dividend yield is 0.48%, and its trailing twelve-month dividend of $0.10 per share translates to an 0.99% yield. It is expected to pay an annual dividend of $0.10 per share on January 6, 2023.
ALGGY’s revenues and income for the third quarter ended September 30, 2022, increased 17.8% year-over-year to ₱45.82 billion ($829.06 million). Its net profit increased 12.7% year-over-year to ₱5.15 billion ($93.18 million). Its net profit to parent company owners rose 4.7% year-over-year to ₱3.68 billion ($66.59 million). Additionally, its EPS attributable to owners of the parent company came in at ₱0.3969, representing a 7% increase from the prior-year quarter.
The stock has gained 28.2% over the past six months to close the last trading session at $10.64.
ALGGY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the REITs - Diversified industry, it is ranked first out of 48 stocks. It has a B grade for Value and Stability.
We have also given ALGGY grades for Growth, Momentum, Sentiment, and Quality. Get all ALGGY ratings here.
The GEO Group, Inc. (GEO)
GEO is a leading diversified government service provider specializing in design, financing, development, and support services for secure facilities, processing centers, and community re-entry centers worldwide. Its services include enhanced in-custody rehabilitation and post-release support, secure transportation, electronic monitoring, community-based programs, and correctional health and mental health care.
GEO’s revenues for the third quarter ended September 30, 2022, increased 10.7% year-over-year to $616.68 million. The company’s net income attributable to GEO increased 10.4% from the year-ago period to $38.34 million. Its adjusted EBITDA increased 17.4% year-over-year to $136.20 million. In addition, its net EPS increased 8.3% year-over-year to $0.26.
GEO’s revenue for the quarter ending December 31, 2022, is expected to increase 8.4% year-over-year to $604.40 million. Its EPS for the quarter ending March 31, 2023, increased 11.5% year-over-year to $0.29. The stock has gained 40.3% year-to-date to close the last trading session at $10.87.
It is no surprise that GEO has an overall rating of B, translating to a Buy in our proprietary rating system. Within the same industry, it is ranked #6. In addition, it has an A grade for Growth.
Click here to see the additional ratings of GEO for Value, Momentum, Stability, Sentiment, and Quality.
One Liberty Properties, Inc. (OLP)
OLP is a self-administered and self-managed real estate investment trust. The company acquires, owns, and manages a geographically diversified portfolio of industrial, retail, restaurant, health and fitness, and theater properties.
OLP’s four-year average dividend yield is 7.53%, and its forward annual dividend of $1.80 per share translates to an 8.12% yield. It is expected to pay a quarterly dividend of $0.45 per share on January 5, 2023.
OLP’s total revenues for the third quarter ended September 30, 2022, increased 5.1% year-over-year to $21.47 million. The company’s operating income increased 26.5% from the year-ago period to $11.77 million. Its net income attributable to OLP increased 18.9% year-over-year to $7.20 million. Also, its net EPS attributable to common stockholders came in at $0.34, representing a 21.4% increase from the prior-year period.
OLP's revenue and EPS for the quarter ending December 31, 2022, are expected to increase 1.7% and 8% year-over-year to $21.20 million and $0.50, respectively. It has an impressive earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters. The stock has fallen 8.4% over the past month to close the last trading session at $22.15.
OLP’s solid prospects are reflected in its POWR Ratings. The company has an overall rating of B, which equates to a Buy in our proprietary rating system. It is ranked #3 in the REITs - Diversified industry. In addition, it has a B grade for Stability and Sentiment.
In total, we rate OLP on eight different levels. Beyond what we stated above, we have also given OLP grades for Growth, Value, Momentum, and Quality. Get all OLP ratings here.
ALGGY shares were trading at $10.64 per share on Friday afternoon, up $0.64 (+6.42%). Year-to-date, ALGGY has declined -9.37%, versus a -18.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
3 Diversified REITs to Buy Now for 2023 StockNews.com
