If you regularly follow income-generating stocks like real estate investment trusts (REITs), you’ll no doubt hear a lot about the larger and more popular REITs, such as Realty Income Corp. (NYSE:O), WP Carey Inc. (NYSE: WPC), Equinine Inc. (NASDAQ: EQIX), Prologis inc. (NYSE: PLD) and others.
But often it’s the lesser-known stocks that can produce the best total performance if they’ve increased their earnings or dividends. Earnings and dividend growth often push stock prices higher, regardless of the popularity of a particular issue.
Take a look at three REITs from different subsectors that have beaten all other REITs in the past year and the forces driving them higher.
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Approving service properties (NASDAQ: SVC) is a diversified REIT based in Newton, Massachusetts, with a portfolio of 220 hotels and 765 service-oriented net outlets that spans 46 states, Puerto Rico and Canada.
Service Properties has had two strong quarters so far in 2023 as hotel occupancy and revenue per available room (RevPAR) increased.
On February 28, fourth quarter funds from operations (FFO) of $0.44 exceeded analysts’ opinion of $0.08 and was up 158% from fourth quarter FFO of $0.17 of 2021. Revenue of $455.22 million topped Wall Street’s opinion of $10.35 and was 8% higher than revenue of $421.38 million in the fourth quarter of 2021.
On May 9, the first quarter FFO of $0.23 represented a 1,250% increase from negative $0.02 in the first quarter of 2022. Revenue of $429.21 million beat the estimate of $412.41 million and represented a 9% increase from the first quarter of 2022. RevPAR recently rose from $96.21 to a projected range of $97 to $103 in the second quarter.
On June 1, Service Properties Trust announced that it had acquired the Nautilus Hotel in Miami Beach, Florida for $165.4 million. The Nautilus is a 250-room luxury beachfront hotel that will undergo a $25 million repositioning in the summer of 2024 and reopen in 2025 under the new name “Nautilus Sonesta Miami Beach.”
Over the past 52 weeks, Service Properties Trust has had a total return of 71.81%. The quarterly dividend is $0.20 and the annual dividend of $0.80 yields 9%.
Tanger Factory Outlet Centers Inc. (NYSE: SKT) is a Greensboro, North Carolina-based retail REIT that owns 37 shopping centers, with 14 million square feet and more than 2,700 stores in 20 states. Many of its malls are malls. Its initial public offering (IPO) dates back to 1993.
Recent developments have been quite positive. On April 11, Tangier increased its quarterly dividend by 11.3%, from $0.22 to $0.245 per share. The annual dividend of $0.98 is currently yielding 4.5%.
On April 27, Tangier announced its first quarter operating results. FFO of $0.46 was a dime above the first quarter of 2022 and topped analyst estimates of $0.44. Revenue of $108.94 million exceeded estimates of $108.72 million and was up from $108.87 million year over year. Tangier also raised its forecast for the year 2023 regarding basic FFO per share.
On May 31, Evercore ISI Group analyst Samir Khanal maintained an online rating for Tangier factory outlet centers and raised the price target from $20 to $22.
Positive developments like these explain why over the past 52 weeks, Tanger Factory Outlet Centers has recorded a total return of 55.57%.
Apartment Investment and Management Co. (NYSE: AIV) is a Denver-based diversified REIT that owns, leases and manages apartment complexes. AIMCO, as it is now called, 6,000 units totaling 14 million square feet across the United States, and its assets under management total $3.5 billion. AIMCO also has over $5 billion in pipeline development, primarily in Florida, Washington DC and Aurora, Colorado. It also has a strong presence in the Miami and Fort Lauderdale Florida areas.
AIMCO’s average daily occupancy rate in the first quarter of 2023 was 98.5%, compared to 97.4% in 2022. AIMCO recorded revenue growth of 10.6% and growth of 14.2% in net operating income (NOI). Looking ahead, AIMCO forecasts 5-7% additional revenue and NOI growth in 2023. One of its successful goals over the past year was to reduce total leverage, and it did it for $400 million.
Recently, AIMCO has come under pressure from activist hedge fund Land & Buildings, which owns 6% of AIMCO. Land & Buildings has been critical of AIMCO’s performance and would like to see the REIT explore a potential sale of the company in the $11-13 per share range. From its most recent close of $8.45, this would be a substantial gain.
Over the past 52 weeks, AIMCO has had a total return of 44.54%. The annual dividend of $0.08 yields less than 1%.
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This article 3 REITs with the Highest Returns in the Past Year originally appeared on Benzinga.com
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