Real estate and real estate investment trusts (REITs) are among the few stocks historically known for generating competitive and attractive total returns. This is partially due to the tendency of these stocks to pay out high and steady dividends, and their returns also benefit from long-term capital appreciation, according to the National Association of Real Estate Investment Trusts (NAREIT). Additionally, another factor making real estate stocks or REITs an attractive investment option is the fact that these stocks' correlation with other assets is relatively low, allowing for them to add more diversity to an investor's portfolio, which in turn reduces risk while increasing returns. As such, investing in real estate stocks or REITs, like Simon Property Group, Inc. (NYSE: SPG), American Tower Corporation (REIT) (NYSE: AMT), Equinix, Inc. (REIT) (NASDAQ: EQIX), and Public Storage (NYSE: PSA), can be a tempting idea for not only conventional investors looking to change things up a bit in their portfolios, but also for income investors looking for steady and high dividend incomes coming from reliable sources.
Perhaps one of the most major benefits of investing in real estate stocks is the fact that these stocks have time and again proven their strength and resilience. Even during times of economic crisis as caused by the rise of the COVID-19 pandemic, the real estate industry has managed to hold on. REITs managed to raise $460 billion in common equity capital up to 2020, for instance, and by the third quarter of 2020, they managed to improve their performance enough for funds from operations (FFO) to begin rising by about 5.6%. And while despite this improvement, the FFO calculated for REITs in the third quarter was still down 22.3% than its value in the third quarter of 2019, hope for a major turnaround was born in the hearts of investors and analysts alike, as far as improvements in real estate were concerned. A major factor contributing to this said hope, for instance, is the fact that as of November 30th, 2020, REITs have also managed to generate a total return of about 50% versus their total return of about -37.6% year to date last March.
The above has resulted in many, like Aberdeen Standard Investments in their report titled "Global Real Estate Market Outlook" for Q3 2021, believing that investors may be returning to real estate as a viable investment option. As the Aberdeen Standard Investments Research Institute estimated that 2021 will witness global economic growth of about 5.7%, while 2022 and 2023 will witness the same of 4.8% and 3.4% respectively, it also commented that investors are seeming more prone to visit assets and increase investment activity in the real estate industry. Within the industry, ASIRI has mentioned that the industrial sector is set to outperform all others, such as the retail and residential sectors, as it has seen the least amount of vacancies since the beginning of the COVID-19 pandemic. However, the whole industry is set to get back on its feet as vaccine rollouts continue and the economy begins to return to normal.
Investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Real Estate Stocks that Pay Monthly Dividends
10. Agree Realty Corporation (NYSE: ADC)
Number of Hedge Fund Holders: 18 Dividend Yield: 3.5%
Agree Realty Corporation (NYSE: ADC) is a real estate investment trust founded in 1971 and based in Michigan. The company works to acquire and develop properties net leased to retail tenants and ranks 10th on our list of real estate stocks that pay monthly dividends.
Ki Bin Kim, an analyst at Truist, raised his price target on shares of Agree Realty Corporation (NYSE: ADC) this July. The new price target is $83 versus the previous $78 target, with Kim also reiterating a Buy rating on shares of Agree Realty Corporation (NYSE: ADC) in light of its Q2 results.
In the second quarter of 2021, Agree Realty Corporation (NYSE: ADC) had an FFO of $0.89, beating estimates by $0.01. The company’s revenue was $82.55 million, up 43.47% year over year and also beating estimates by $0.83 million. Agree Realty Corporation (NYSE: ADC) has also gained 11.36% in the past 6 months and 14.72% year to date.
By the end of the first quarter of 2021, 18 hedge funds out of the 866 tracked by Insider Monkey held stakes in Agree Realty Corporation (NYSE: ADC) worth roughly $200 million. This is compared to 16 hedge funds in the previous quarter with a total stake value of approximately $242 million.
9. STAG Industrial, Inc. (NYSE: STAG)
Number of Hedge Fund Holders: 17 Dividend Yield: 3.5%
STAG Industrial, Inc. (NYSE: STAG), a REIT specializing in acquiring and operating single-tenant industrial properties in the US, ranks 9th on our list of real estate stocks that pay monthly dividends. The company's investment strategy offers a good balance of income and growth to its investors.
Michael Carroll at RBC Capital raised his price target on STAG Industrial, Inc. (NYSE: STAG) shares this August from $42 to $46. The analyst also reiterated a Buy rating on the shares in light of the company's "strong" Q2 earnings.
In the second quarter of 2021, STAG Industrial, Inc. (NYSE: STAG) had an FFO of $0.52, beating estimates by $0.02. The company’s revenue was $138.43 million, up 17.69% year over year and also beating estimates by $4.07 million. STAG Industrial, Inc. (NYSE: STAG) has also gained 29.36% in the past 6 months and 36.69% year to date.
By the end of the first quarter of 2021, 17 hedge funds out of the 866 tracked by Insider Monkey held stakes in STAG Industrial, Inc. (NYSE: STAG) worth roughly $173 million. This is compared to 25 hedge funds in the previous quarter with a total stake value of approximately $218 million.
8. Realty Income Corporation (NYSE: O)
Number of Hedge Fund Holders: 18 Dividend Yield: 4%
Realty Income Corporation (NYSE: O) is an S&P 500 company that is known for its mission to offer its stockholders a reliable monthly income, resulting in the company often being referred to as the "Monthly Dividend Company." It is a REIT with more than 6,500 real estate properties under its wing and ranks 8th on our list of real estate stocks that pay monthly dividends.
Haendel St. Juste, an analyst at Mizuho, upgraded shares of Realty Income Corporation (NYSE: O) this June from Neutral to Buy. The analyst also has a $77 price target on the stock.
In the second quarter of 2021, Realty Income Corporation (NYSE: O) had an FFO of $0.88, beating estimates by $0.01. The company’s revenue was $464.28 million, up 19.28% year over year and also beating estimates by $31.06 million. Realty Income Corporation (NYSE: O) has also gained 14.38% in the past 6 months and 17.98% year to date.
By the end of the first quarter of 2021, 18 hedge funds out of the 866 tracked by Insider Monkey held stakes in Realty Income Corporation (NYSE: O) worth roughly $183 million. This is compared to 24 hedge funds in the previous quarter with a total stake value of approximately $238 million.
7. SL Green Realty Corp. (NYSE: SLG)
Number of Hedge Fund Holders: 21 Dividend Yield: 5.1%
SL Green Realty Corp. (NYSE: SLG) is known as Manhattan's "largest office landlord" and is an S&P 500 company. This REIT focuses on the acquisition, management, and value maximization of commercial properties in Manhattan, and ranks 7th on our list of real estate stocks that pay monthly dividends.
This June, Piper Sandler's Alexander Goldfarb raised the price target on shares of SL Green Realty Corp. (NYSE: SLG) from $75 to $88. Goldfarb also held on to his Neutral rating on the company's shares.
In the second quarter of 2021, SL Green Realty Corp. (NYSE: SLG) had an FFO of $1.60, missing estimates by $0.02. The company’s revenue was $184.61 million, beating estimates by $2.09 million. SL Green Realty Corp. (NYSE: SLG) has also gained 11.59% in the past 6 months and 22.37% year to date.
By the end of the first quarter of 2021, 21 hedge funds out of the 866 tracked by Insider Monkey held stakes in SL Green Realty Corp. (NYSE: SLG) worth roughly $162 million. This is compared to 22 hedge funds in the previous quarter with a total stake value of approximately $214 million.
6. EPR Properties (NYSE: EPR)
Number of Hedge Fund Holders: 15 Dividend Yield: 6%
EPR Properties (NYSE: EPR), an experiential net-lease REIT that focuses on select enduring experiential properties, and is a leader in its field. The company ranks 6th on our list of real estate stocks that pay monthly dividends.
Simon Yarmak from Stifel this July raised his price target on shares of EPR Properties (NYSE: EPR) from $49 to $55. Yarmak also has a Hold rating on the stock.
In the second quarter of 2021, EPR Properties (NYSE: EPR) had an FFO of $0.68, beating estimates by $0.07. The company’s revenue was $125.36 million, up 17.87% year over year and also beating estimates by $12.74 million. EPR Properties (NYSE: EPR) has also gained 23.34% in the past 6 months and 63.5% year to date.
By the end of the first quarter of 2021, 15 hedge funds out of the 866 tracked by Insider Monkey held stakes in EPR Properties (NYSE: EPR) worth roughly $345 million. This is compared to 15 hedge funds in the previous quarter with a total stake value of approximately $382 million.
5. Broadmark Realty Capital Inc. (NYSE: BRMK)
Number of Hedge Fund Holders: 12 Dividend Yield: 8.1%
Broadmark Realty Capital Inc. (NYSE: BRMK), based in Seattle, underwrites, funds, services, and manages a portfolio of short-term, first deed of trust loans to construct and invest in residential or commercial American properties. The company ranks 5th on our list of real estate stocks that pay monthly dividends.
B. Riley’s Matt Howlett assumed coverage of shares of Broadmark Realty Capital Inc. (NYSE: BRMK) with a Buy rating and a $12.50 price target just this April. Howlett also commented that mortgage REITs like Broadmark Realty Capital Inc. (NYSE: BRMK) can expect stronger tailwinds in the coming months with thawing credit and steepening yield curves.
In the first quarter of 2021, Broadmark Realty Capital Inc. (NYSE: BRMK) had an FFO of $0.18, missing estimates by $0.02. The company’s revenue was $29.47 million, also missing estimates by $2.80 million. Broadmark Realty Capital Inc. (NYSE: BRMK) has gained 4.75% year to date and 6.33% in the past year.
By the end of the first quarter of 2021, 12 hedge funds out of the 866 tracked by Insider Monkey held stakes in Broadmark Realty Capital Inc. (NYSE: BRMK) worth roughly $98.7 million. This is compared to 10 hedge funds in the previous quarter with a total stake value of approximately $90.6 million.
White Brook Capital, an investment management firm, mentioned Broadmark Realty Capital Inc. (NYSE: BRMK) in its first-quarter 2021 investor letter. Here’s what they said:
“Broadmark Realty, Inc (BRMK), was sold because of competition for capital from new positions and other investments in the portfolio. The company will continue to do fine, but better short and long-term investment opportunities were available.”
4. Dynex Capital, Inc. (NYSE: DX)
Number of Hedge Fund Holders: 10 Dividend Yield: 9
Dynex Capital, Inc. (NYSE: DX), a mortgage REIT investing in agency and non-agency mortgage-backed securities (MBS) in the US, ranks 4th on our list of real estate stocks that pay monthly dividends. The company’s investments are made up of residential and commercial MBS and commercial MBS interest-only securities.
Keefe Bruyette holds a Market Perform rating on shares of Dynex Capital, Inc. (NYSE: DX) while BTIG analysts hold a Buy rating on the stock.
In the second quarter of 2021, Dynex Capital, Inc. (NYSE: DX) had an FFO of $0.51, beating estimates by $0.04. The company’s revenue was $12.12 million, missing estimates by $2.96 million, however. Dynex Capital, Inc. (NYSE: DX) has gained 11.81% in the past year.
By the end of the first quarter of 2021, 10 hedge funds out of the 866 tracked by Insider Monkey held stakes in Dynex Capital, Inc. (NYSE: DX) worth roughly $23.7 million. This is compared to 10 hedge funds in the previous quarter with a total stake value of approximately $15.1 million.
3. AGNC Investment Corp. (NASDAQ: AGNC)
Number of Hedge Fund Holders: 18 Dividend Yield: 9.1%
AGNC Investment Corp. (NASDAQ: AGNC) is an American REIT investing in residential mortgage pass-through securities and collateralized mortgage obligations. The company ranks 3rd on our list of real estate stocks that pay monthly dividends and was formerly known as American Capital Agency Corp., changing its name in 2016.
Mark DeVries, an analyst at Barclays, holds an Overweight rating on shares of AGNC Investment Corp. (NASDAQ: AGNC) as of this July. The analyst also has a $17 price target on the stock.
In the second quarter of 2021, AGNC Investment Corp. (NASDAQ: AGNC) had an FFO of $0.76, beating estimates by $0.11. The company’s revenue was $232 million, missing estimates by $90.23 million, however. AGNC Investment Corp. (NASDAQ: AGNC) has gained 4.03% year to date and 15.26% in the past year.
By the end of the first quarter of 2021, 18 hedge funds out of the 866 tracked by Insider Monkey held stakes in AGNC Investment Corp. (NASDAQ: AGNC) worth roughly $167 million. This is compared to 25 hedge funds in the previous quarter with a total stake value of approximately $353 million.
2. ARMOUR Residential REIT, Inc. (NYSE: ARR)
Number of Hedge Fund Holders: 9 Dividend Yield: 11.5%
ARMOUR Residential REIT, Inc. (NYSE: ARR) is a REIT with a securities portfolio consisting of US Government-sponsored entity’s and Government National Mortgage Administration-issued securities with fixed rate, hybrid adjustable rate, and adjustable rate home loans. The company primarily invests in residential mortgage-backed securities and ranks 2nd on our list of real estate stocks that pay monthly dividends.
B. Riley has a Neutral rating on shares of ARMOUR Residential REIT, Inc. (NYSE: ARR) as of this July, alongside an $11.50 price target. Analyst Matt Howlett also commented that ARMOUR Residential REIT, Inc. (NYSE: ARR) was among the few “pure-play agency-only” mortgage REITs out there that are offering investors a low credit risk high-yielding cash flow stream.
In the second quarter of 2021, ARMOUR Residential REIT, Inc. (NYSE: ARR) had an FFO of $0.21, missing estimates by $0.07. The company’s revenue was $16.7 million, higher than the previous quarter’s revenue of $16.06 million. ARMOUR Residential REIT, Inc. (NYSE: ARR) has also gained 6.06% in the past year.
By the end of the first quarter of 2021, 9 hedge funds out of the 866 tracked by Insider Monkey held stakes in ARMOUR Residential REIT, Inc. (NYSE: ARR) worth roughly $22.2 million. This is compared to 13 hedge funds in the previous quarter with a total stake value of approximately $23.5 million.
1. Orchid Island Capital, Inc. (NYSE: ORC)
Number of Hedge Fund Holders: 8 Dividend Yield: 16.3%
Orchid Island Capital, Inc. (NYSE: ORC), incorporated in 2010 and headquartered in Florida, ranks 1st on our list of real estate stocks that pay monthly dividends. The company invests in residential mortgage-backed securities (RMBS) and its portfolio consists of pass-through Agency RMBS and structured Agency RMBS.
In the second quarter of 2021, Orchid Island Capital, Inc. (NYSE: ORC) had an FFO of $0.24, missing estimates by $0.03. The company’s revenue was $27.70 million, up 21.59% year over year and beating estimates by $1.41 million.
By the end of the first quarter of 2021, 8 hedge funds out of the 866 tracked by Insider Monkey held stakes in Orchid Island Capital, Inc. (NYSE: ORC) worth roughly $19.9 million. This is compared to 10 hedge funds in the previous quarter with a total stake value of approximately $14.8 million.
