3 REITs to Buy as Soon as Possible

Between the pandemic, shutdowns, and the market volatility it all caused, investors have been pouring money into stable income-producing investments like real estate investment trusts (REITs). But not all REITs are equal, so we'll show you the three REITs to buy today.

REITs were thumped in the early stages of the coronavirus economic shutdown. While the game has changed - perhaps permanently - for sectors like shopping malls, hotels, and some office properties, there are segments of the REIT market that will do just fine. More than fine, actually.

In fact, they should prosper and grow as the economy reopens in the months ahead. Investors who use this opportunity to load up on these shares could be looking at massive gains over the next several years.

This includes some retail REITs that are being overlooked by the market right now.

REIT to Buy, No. 3: Realty Income

Realty Income Corp. (NYSE: O) has been a top-performing REIT since its first listing on the stock exchange back in 1994.

Since then, Realty Income shares have returned an average of 14.6%, easily outpacing the S&P 500, which gained just about 10% over the same span. The company now has a market capitalization of over $18 billion.

Realty Income has been one of the steadiest performers among all REITs. It has an unmatched track record of growing profits as it has increased earnings 23 of the last 24 years. While it had a slight decline in 2008 as the financial crisis hammered the economy, profits surged higher in 2009 and have continued to grow.

Realty Income pays monthly dividends, so it is a fantastic income stock. The shares currently yield over 5%. The REIT has paid 598 consecutive monthly dividends, and there have been 106 dividend increases since the 1994 IPO. The dividend has grown by an average of 14% since the IPO, so it has been a great dividend stock for long-term owners. The payout has been so consistent that Realty Income is included in the S&P 500 Dividend Aristocrats index.

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Realty Income leases more than 6,500 properties to 630 different tenants in the United States, Puerto Rico, and the United Kingdom. While many of the tenants are retail companies, these are free-standing buildings with grocery stores like Kroger Co. (NYSE: KR) as well as Walmart Inc. (NYSE: WMT) and Sam's Club locations. Its largest tenant group is pharmacy chains like Walgreens Boots Alliance Inc. (NYSE: WBA) and CVS Health Corp. (NYSE: CVS), which have not missed a beat in the current economic shutdown.

The occupancy rate is over 98%, and I don't expect that to fall much in the COVID-19 pandemic economy.

REIT to Buy, No. 2: Regency Centers

Regency Centers Corp. (NYSE: REG) should also come out of the crisis in solid shape.

Regency owns a high-quality portfolio of open-air shopping centers that are 80% grocery-anchored. Many of its other tenants are also essential businesses, including pharmacies, liquor stores, and hardware stores. Regency owns a total of 419 centers, all of which are located in affluent, densely populated areas.

Regency also had its IPO back in 1994. While not by as steep a margin as Realty Income, Regency Centers has also outperformed the stock market since the IPO with an annual average total return of 11%.

Shares of Regency Centers currently yield almost 6%. They have a strong track record of raising the dividend, with the payout growing by about 4% annually on average.

Regency has an occupancy rate of 95.5%. With healthy grocers like Publix and Whole Foods taking up most of the space, this REIT should not see too much decrease in occupancy. Pharmacies and liquor stores are not going to be closing, nor will restaurants like Starbucks Corp. (NASDAQ: SBUX) and Chick-Fil-A that are large tenants at Regency Centers Properties.

But my next REIT to buy isn't dealing with shopping centers or retail locations. It's a play on the new need to keep data and technology secure.

And it's going to be even more essential as the economy continues to shift in a digital direction...[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]

REIT to Buy, No. 1: Iron Mountain

Outside of the retail real estate sector, Iron Mountain Inc. (NYSE: IRM) stands out as a high-yielding REIT with the potential for massive returns over the next several years. Iron Mountain is the global leader for storage and information management services. It stores vital records and data for more than 225,000 companies and organizations around the world in nearly 1,450 facilities. Iron Mountain operates in approximately 50 countries around the world.

Iron Mountain was initially founded in 1951 as Iron Mountain Atomic Storage. A mushroom farmer named Herman Knaust used an empty iron ore mine and offered storage space. He provided space to businesses and government agencies to store records in a place that would survive a war or other disaster.

As the company grew, he began to offer above-ground secure storage for paper records, memorabilia, and artwork. In 1988, the company acquired Bell & Howell Records Management - then the industry leader served 12 major U.S. markets, none of which were being served by Iron Mountain. As a result, Iron Mountain became the first national service provider in the industry. In 1996, the company went public, listing on the New York Stock Exchange.

Today, Iron Mountain continues to offer secure storage and has grown to meet the needs of the expanding digital world as well. It provides services to translate records into digital form. It has invested over $3 billion in data centers since 2017 and now has 15 locations on three continents. Five of the top 10 cloud providers are Iron Mountain Data Center customers.

Iron Mountain has an incredibly steady business. It has a 98% retention rate with its customers. More than 50% of the boxes of records it stores will stay on the shelf for 15 years or more. It currently stores documents for 95% of Fortune 1000 customers.

After the pandemic-inspired sell-off of REITs, Iron Mountain shares now yield over 10%. The combination of the stable records storage business and fast-growing data center business should push the stock price dramatically higher over the next several years.

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About the Author

Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.

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