3 Top Real Estate Stocks to Buy in September

Trying to beat the bear in this market is not easy, but there are some options to consider that have held up well and hold plenty of promise for the time when the market recovers.

Dividend-paying stocks are a good place to look, as are real estate stocks. Combine the two and you get real estate investment trusts (REITs), which own pools of rental properties and are required to pay out at least 90% of their taxable income in the form of dividends.

Although there are more than 200 publicly traded REITs, three that might merit buying this month are retail landlords Agree Realty (ADC -2.68%)auto services specialist GettyRealty (GTY -1.41%)and casino owner VICI Properties (VICI -1.67%).

GTY Total Return Level data by YCharts

As the chart above shows, each of these REITs is still in the green in one-year total return, sharply outperforming both the S&P 500 and benchmark Vanguard Real Estate ETFan exchange-traded fund that holds about 160 individual REITs.

Here’s more on each.

1. Agree Realty

Agree Realty owns more than 1,600 properties in 48 US states and has built an enviable record for both shareholder return and dividend growth. Since its initial public offering in 1994, the company has delivered a compound annual return of 12.7%, while its dividend rose at a 5.5% annualized rate during the past 10 years.

A portfolio that’s two-thirds occupied by investment-grade retailers (Walmart is its largest tenant by rent) and a strong balance sheet allow the company to expand rapidly. Agree’s added 228 properties in the first half of 2022 and plans to end the year with $1.5 billion to $1.7 billion in new investment in buildings and in its growing business of leasing land to developers.

The market likes this stock. Agree shares now trade for about $71, pretty much unchanged so far this year, while the dividend yield of 3.9% means investors are still above water. Analysts give it a “moderate buy” rating with a price target of $79.86.

2.Getty Realty

Like Agree, Getty Realty is a retail REIT, but it’s much more specialized. Its portfolio as of 2022’s second-quarter was made up of 1,024 properties in 38 states, primarily gas stations, convenience stores, auto parts shops, and car washes.

“We invest in freestanding, single-tenant properties where consumers spend money in their cars or on their cars,” is how Getty describes its business, and it’s worked out well. The real estate company traces its roots to Getty Petroleum and has soundly beaten the S&P 500 in total return since its 1997 spinoff, when the parent company was sold to Russia’s Lukoil.

Getty Realty is also expanding its portfolio, adding to its ability to continue a record of nine years of dividend increases that have the current yield at about 5.5%. A payout ratio of a relatively modest 71% based on cash flow also adds to this REIT’s stability as a driver of passive income and total return.

3. VICI Properties

VICI Properties is not like the other two on this list. This REIT owns more than 122 million square feet of casinos and other entertainment and hospitality destinations. Among its 43 tenants are such marquee Las Vegas operations as Caesars Palace, the MGM Grand, and the Venetian.

Created as a spinoff from Caesar’s Entertainment, it owns properties with 19,200 hotel rooms, more than 450 restaurants, bars, clubs, and sports books, and four championship golf courses. It has raised its dividend every year since its 2018 IPO, even through the worst of the pandemic.

VICI Properties stock is up a market-trouncing 9.5% year to date and is yielding about 4.7% at a share price of about $33. Analysts rate it a “buy” with a consensus target price of $36.45. A payout ratio of 80% based on cash flow and the popularity of its locations across the US increase the odds of continuing solid performance.

Recession, inflation resistance help commend these stocks as buy-and-holds

I already own shares of Getty Realty and Agree Realty and plan to add to those stakes, and I’m now considering VICI Properties, too. Each of these companies has held up well during the pandemic and has the properties in place to sustain profit even through inflation and recession. That makes them good buys to consider this month and in the future.

Marc Rapport has positions in Agree Realty, Getty Realty, and Vanguard Real Estate ETF. The Motley Fool has positions in and recommends Vanguard Real Estate ETF and Walmart Inc. The Motley Fool recommends VICI Properties Inc. The Motley Fool has a disclosure policy.