Retail REITs are experiencing a surge in popularity as the post-pandemic economy bounces back and businesses reopen. With investors taking notice, many are wondering if now is the right time to invest in these real estate investment trusts. To help you make an informed decision, we have compiled a list of the best retail REITs to buy now.
Realty Income Corp. (NYSE: O)
Realty Income Corp. is a well-established and trusted retail REIT that is one of the largest in the market. With a market cap of nearly $40 billion, Realty Income Corp. owns and leases over 11,700 retail properties under long-term net-lease agreements. Since its inception, the REIT has provided investors with a compound annual total return of 14.4% since 1994. Additionally, Realty Income Corp. pays a monthly dividend, with a generous annual yield of 4.7%. The trust's diverse portfolio primarily focuses on recession-resistant retail sectors, such as grocery stores, convenience stores, and dollar stores.
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Phillips Edison & Company, Inc. (NASDAQ: PECO)
Phillips Edison & Company specializes in grocery-anchored shopping centers, making it one of the largest owners and operators in the country. With a market cap of nearly $4 billion, PECO offers investors a dividend yield of 3.68%. The retail REIT has consistently surpassed FFO consensus in the past year and reported better-than-expected revenues in Q3. Its portfolio is focused on high-quality retail properties, ensuring steady cash flow and growth potential.
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National Retail Properties (NYSE: NNN)
National Retail Properties specializes in owning freestanding retail stores across the United States. With a portfolio of over 3,300 retail properties boasting a remarkable 99.4% occupancy rate, NNN offers investors an annual yield of 5%. The retail REIT is known for its 33rd consecutive annual dividend increase, positioning it as a dividend aristocrat. National Retail Properties' revenue has been steadily rising in line with the national increase in rent prices.
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Simon Property Group (NYSE: SPG)
Simon Property Group is one of the largest shopping mall REITs in the retail space, boasting a market cap of $43 billion and controlling over 190 million square feet of retail space. With a portfolio that includes iconic properties worldwide, such as CityOn in China and Sawgrass Mills in Florida, SPG offers investors a compelling annual dividend yield of 6.24%. Simon Property Group has seen strong Q3 earnings, with significant revenue growth and improved occupancy rates.
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KIMCO Realty Corp. (NYSE: KIM)
KIMCO Realty Corp. is North America's largest publicly traded owner and operator of open-air, grocery-anchored shopping centers. With a growing portfolio of 536 properties and a market cap valuation of $13 billion, KIMCO Realty Corp. offers investors a dividend yield of 4.36%. The retail REIT recently reported strong Q3 earnings, beating FFO expectations and providing increased forward guidance for Q4. Open-air shopping centers are in high demand, and KIMCO Realty Corp. is well-positioned to capitalize on this trend.
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Slate Retail REIT (OTCMKTS: SRRTF)
Slate Retail REIT focuses on grocery-anchored retail spaces, with 93% of its assets in this segment. With a portfolio of 121 properties valued at $2.4 billion, Slate Retail REIT offers one of the highest dividend yields in the industry, at 7.66% annually. The REIT's latest earnings report shows promising growth in FFO and a favorable debt structure with fixed interest rates. While trading in OTC markets, investors should consider the higher risk associated with these stocks.
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SITE Centers Corp. (NYSE: SITC)
SITE Centers Corp. wholly owns 103 retail shopping centers across the country, with an impressive tenant mix that includes well-established brands like Krogers, Best Buy, and Kohls. With a focus on sustainable growth and a strategy centered around affluent neighborhoods, SITE Centers Corp. offers investors a dividend yield of 4.22%. The REIT's recent Q3 earnings report exceeded FFO expectations, showcasing its stability and growth potential.
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Retail REITs present a compelling investment opportunity, especially for those seeking high dividend yields in a relatively stable environment. These real estate investment trusts allow investors to participate in the real estate market without the need for significant capital. Retail REITs, like the ones mentioned above, offer the potential for both dividend income and capital appreciation.
However, it's important to exercise caution, as the retail sector does face some risks. The rise of eCommerce and the potential for an economic downturn could result in lower occupancy rates. In addition, the increase in interest rates by the Federal Reserve may impact borrowing capabilities for retail REITs. The sector heavily relies on borrowing to develop and purchase new properties. Nonetheless, well-positioned retail REITs have the potential to generate stable income and protect against market uncertainties.
Investing in retail REITs allows individuals to enter the world of real estate investing without the need for substantial capital. With the right selection of retail REITs, investors can enjoy both dividend income and the potential for capital appreciation.
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