Real estate rents and property values typically rise with inflation, driving REIT dividend growth and ensuring a steady income stream for investors. Likewise, REITs thrive on inflation-driven rent and property value increases, acting as a natural hedge against rising costs.
Therefore, with consistent growth, strong REITs like W. P. Carey Inc. (WPC), SBA Communications Corporation (SBAC), and Ladder Capital Corp (LADR) offer reliable income in inflationary markets.
Over the past 20 years, REIT dividends have consistently outpaced inflation in 18 of those years, ensuring income growth that outpaces rising prices. With the U.S. Consumer Price Index up 0.3% in November and the annual inflation rate at 2.7%, slightly higher than October's 2.6%, REITs remain an attractive choice for investors seeking reliable payouts, wealth growth, and protection against inflation.
Additionally, REITs provide global diversification and sector-specific exposure, offering protection against local economic downturns while capitalizing on global market growth. They can perform well in rising interest rate environments, thanks to their yield-based returns, often outperforming stocks. The market size is projected to reach an impressive $4.20 trillion by 2027, growing at a CAGR of 2.8%.
Overall, REITs present a balanced investment opportunity. With this in mind, let's now dive into the fundamentals of the three REITs – Diversified stocks mentioned above, starting with number three.
Stock #3: W. P. Carey Inc. (WPC)
WPC ranks among the largest net lease REITs, boasting a well-diversified portfolio of high-quality, operationally critical commercial real estate. As of December 31, 2023, its portfolio includes 1,424 net lease properties spanning approximately 173 million square feet, along with 89 self-storage operating properties.
WPC’s trailing-12-month EBITDA margin of 82.68% is 52% higher than the 54.39% industry average. The stock’s trailing-12-month Return on Common Equity of 6.30% is 74.4% higher than the industry average of 3.61%. Also, its trailing-12-month Return on Total Assets of 3.17% is 96.3% higher than the industry average of 1.61%.
During the third quarter, which ended on September 30, 2024, WPC reported net revenues of $394.78 million. The company’s net income was $111.65 million, while dividends declared per share were $0.88. Additionally, WPC’s AFFO attributable to WPC amounted to $259.35 million.
Street expects WPC’s FFO for the quarter ending December 31, 2024, to increase 22% year-over-year to $1.18. Its revenue for the quarter ending March 31, 2025, is expected to increase 3.9% year-over-year to $405.15 million. Over the past year, the stock has gained 1.1% to close the last trading session at $55.85.
WPC’s POWR Ratings reflect its strong fundamentals. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Stability and Quality. Within the REITs – Diversified industry, it is ranked #7 out of 43 stocks. To see WPC’s ratings for Growth, Value, Momentum, and Sentiment, click here.
Stock #2: SBA Communications Corporation (SBAC)
SBAC is a leading independent owner and operator of wireless communications infrastructure including towers, buildings, rooftops, distributed antenna systems (DAS), and small cells.
In terms of the trailing-12-month EBIT margin, SBAC’s 52.99% is 136.4% higher than the 22.41% industry average. Similarly, the stock’s 77.51% trailing-12-month gross profit margin is 18.4% higher than the 65.49% industry average. Moreover, its trailing-12-month net income margin of 25.76% is 132.8% higher than the 11.07% industry average.
In the third quarter, which ended on September 30, 2024, SBAC’s total revenues were $667.60 million. Its adjusted EBITDA stood at $472.62 million. The company’s net income was $255.89 million, representing an increase of 199.8% from the prior year’s quarter.
For the quarter ending December 31, 2024, SBAC’s revenue is expected to increase 1.4% year-over-year to $684.75 million. Its FFO for the quarter ending March 31, 2025, is expected to increase 26.3% year-over-year to $3.17. Over the past six months, SABC’s stock has gained 9.8% to close the last trading session at $215.49.
SBAC’s bright prospects are reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
It has a B grade for Growth, Sentiment, and Quality. It is ranked #4 in the same industry. To access the additional grades of SBAC for Value, Momentum, and Stability, click here.
Stock #1: Ladder Capital Corp (LADR)
LADR operates as an internally managed real estate investment trust. It functions through three segments: Loans, Securities, and Real Estate.
In terms of the trailing-12-month gross profit margin, LADR’s 75.53% is 25.1% higher than the 59.57% industry average. Similarly, its 1.79% trailing-12-month Return on Total Assets is 66.6% higher than the 1.07% industry average. Its 37.39% trailing-12-month net income margin is 69.4% higher than the 22.08% industry average.
LADR’s net interest income for the nine months that ended on September 30, 2024, amounted to $95.99 million. Its total other income stood at $106.81 million, up marginally year-over-year. Moreover, the company’s attributable net income and EPS were $76.87 million and $0.61, respectively.
Analysts expect LADR’s revenue for the quarter ending December 31, 2024, to increase 13.5% year-over-year to $68.68 million. It surpassed the Street EPS estimates in three of the trailing four quarters. Over the past six months, the stock has gained 7.3% to close the last trading session at $11.85.
It’s no surprise that LADR has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Sentiment and Quality and is ranked #2 in the REITS - Diversified industry. In addition to what we have stated above, we have given LADR grades for Growth, Value, Momentum, and Stability. Get all the LADR ratings here.
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SBAC shares were trading at $214.21 per share on Friday afternoon, down $1.84 (-0.85%). Year-to-date, SBAC has declined -14.00%, versus a 28.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
3 REITs for Reliable Income in an Inflationary Market StockNews.com
