In most years, a inventory that’s up 10% or so over three months would not rely as scorching. However in a 12 months when many development shares are down 60%, 70%, and even 80%, and nearly all of REITs are down 30% or extra, having any degree of momentum is spectacular.

These three REITs, Agree Realty (ADC 1.82%), Omega Healthcare Buyers (OHI 2.05%), and W.P. Carey (WPC 2.89%), have all proven energy whereas the remainder of the business hasn’t, and every has a robust dividend yield (the bottom of the three is 3.8%). Let’s speak about what their prospects are and if the shares are simply getting began.

1. Agree Realty

Agree Realty is a retail REIT that owns 1,510 properties in 47 states. The properties are predominantly big-box retailers — 9.9% of properties are leased by grocery shops, 9.4% by home-improvement warehouses, and the remaining by assorted different retailers. Agree additionally owns 186 properties (included within the 1,510 complete) which might be ground-leased to the identical varieties of retailers. Which means Agree owns the land, and the retailer or one other enterprise owns the constructing and leases the land.

Agree’s inventory is up nearly 5% on the 12 months. Usually that return could be lackluster, however in 2022, it qualifies as full-blown scorching. So, what has pushed the inventory worth this 12 months?

It is a mixture of nice efficiency and aggressive enlargement. Agree posted robust fourth-quarter 2021 and first-quarter 2022 outcomes and introduced in a current investor presentation that it will purchase $1.Four billion to $1.6 billion value of recent properties in 2022, a rise in acquisitions for the eighth 12 months in a row.

In the meantime, it pays a constant month-to-month 3.8% dividend yield, has a robust steadiness sheet with nearly twice as a lot fairness as debt, and income has been up greater than 300% since 2016. There are fairly good causes that Agree has supplied regular returns, even this 12 months, and it doubtless will proceed to take action going ahead.

2. Omega Healthcare Buyers

Healthcare REITs are historically touted as recession-resistant. Healthcare has inelastic demand — that’s, prospects or sufferers will typically pay what it takes — so healthcare suppliers and their landlords ought to be immune to short-term financial points and inflation. Regardless of that idea, many healthcare REITs have fallen 30% or extra this 12 months. Not Omega Healthcare Buyers.

Omega is up about 3% on the 12 months and nearly 10% over the previous month. A part of the explanation for Omega’s resistance this 12 months is its huge dividend yield. Proper now, the inventory yields over 9%. It is onerous to promote a inventory for those who might be able to rely on a 9% dividend to bolster your returns. The query is whether or not that dividend fee is dependable.

Omega Healthcare owns and leases nursing properties. Its enterprise was hit onerous early within the pandemic. Occupancy fell 13% from 2020 to 2021. 15% of its tenants could not meet their complete contractual obligation in 2021. Omega selected to work with its operators, and by April 2022, it had collected 91% of its hire and mortgage obligations.

Omega hasn’t reduce its dividend since October 2003. The market had already priced in some degree of skepticism that the REIT would proceed churning out hefty shareholder funds, however its steadiness sheet energy and self-discipline have saved the dividends coming. If they will maintain it going sooner or later, anticipate the inventory to reply.

3. W.P. Carey

W.P. Carey’s inventory is little modified on the 12 months. After all, for those who embrace its 5.13% annualized dividend, the overall return is shut to five%. Once more, that’s properly above the poor returns of the S&P 500 and the REIT business. Like the opposite two REITs, W.P. Carey has an extended historical past of paying out dividends. In truth, it has elevated its dividend yearly since 1998.

W.P. Carey is a diversified REIT that focuses on long-term internet leases within the U.S. and Northern and Western Europe. It owns 1,304 properties, and they’re leased to 352 completely different tenants in 24 completely different international locations. About 35% of the properties are positioned exterior of the U.S.

W.P. Carey’s inventory energy is probably going on account of its unimaginable dividend consistency. It owes that dividend consistency to its inside diversification. Its greatest property kind focus is industrial at simply 25.8%. Its greatest tenant business is retail shops at simply 21.9%. And whereas 65% of its leases are within the U.S., these are unfold across the nation, and there’s no materials tenant focus.

Moreover, the REIT has contractual hire will increase constructed into 99% of its leases, 58% of that are primarily based on the patron worth index. And keep in mind, it focuses on internet leases. Which means the tenant pays for all the variable prices like utilities, taxes and upkeep. As inflation rages, its prices keep across the similar, and its rents go up. For those who put “protected REIT” right into a search engine, W.P. Carey could be the consequence.