Best Stocks For Inflation In 2021? 4 Real Estate Stocks To Watch

Real estate stocks not only offer diversification to your portfolio, but are also a strong inflation hedge.

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18, 2021

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This story originally appeared on StockMarket

Do You Have Real Estate Stocks On Your Radar Following The Fed’s Meeting?

Real estate stocks have been one of the best performing sectors of the stock market recently. And it is not difficult to understand why. Traditionally, real estate investment trusts (REITs) have proven to be a wonderful asset to own literally in all economic, interest rate, and inflationary environments. Investors often turn to top real estate stocks when they anticipate higher inflation because of the sector’s pricing power. And with the real estate sector posting stronger gains than the S&P 500 in recent weeks, it should not come as a surprise that investors are increasingly on the lookout for the best real estate stocks to buy.

On Wednesday, the Federal Reserve announced two potential rate hikes by the end of 2023. And that has resulted in a sell-off in the futures trading, which was mostly expected. This came after consumer prices rose 5% in May from a year earlier according to the U.S. Labor Department. This represents the biggest surge in inflation in nearly 13 years. If inflation continues to be a major concern for the market, there’s a great chance that many will look to real estate as an inflation hedge. 

Given that property prices and rental income tend to move along with the pace of inflation, it makes sense to put up a list of top real estate stocks to buy in the stock market today. Besides, the real estate sector also provides respectable dividend yields that could offer passive income to investors. More importantly, you may be able to pick up some top real estate stocks with reasonable long-term growth at decent valuations. With all that being said, here are four real estate stocks you might want to keep an eye on following the Fed Meeting and Powell’s Remarks.

Top Real Estate Stocks To Watch Right Now

Omega Healthcare Investors

Omega Healthcare Investors (OHI) is a healthcare real estate investment trust (REIT) that you’ll want to take a closer look at. For starters, OHI owns senior housing properties, with a focus on nursing homes. And since the novel coronavirus tends to have the worst impact on older adults, OHI’s business has been severely affected last year. Thankfully, the occupancy rate began to return in 2021 thanks to the massive vaccination efforts. 

Investors might want to consider this healthcare REIT because it is currently sitting on an 18-year streak of annual dividend hikes. Sure, there are headwinds for the healthcare REIT as we are still in the midst of a pandemic. But what likely makes OHI stock an attractive investment is its fat dividend yield of 7.1%. Considering that the U.S. government has also been very supportive in providing assistance, that should provide ample breathing for Omega’s tenants. Considering all these, OHI stock may be worth a look if you like real estate stocks.

top real estate stocks (OHI stock)
Source: TD Ameritrade TOS

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Realty Income

No list of top real estate stocks is complete without Realty Income. While several REITs pay monthly dividends, this company’s monthly payout is a crucial part of its identity. In fact, the company actually trademarked “The Monthly Dividend Company” as its official nickname. Look no further if you want a safe and consistent payout for your portfolio. The REIT even boasts on its homepage its 610 consecutive monthly dividends paid and 4.4% annualized dividend growth since 1994.

What’s making Realty Income a compelling investment is its portfolio of strong clientele. After all, it has top tenants like Walmart (NYSE: WMT) and Dollar General (NYSE: DG). And these tenants should continue to do well and bring in a stable revenue stream for the company. Considering the fact that the economy is slowly reopening, Realty Income’s most affected tenants such as cinema operators and gyms should enjoy a nice recovery. Thus, would you add O stock to your portfolio?

best real estate stocks (O stock)
Source: TD Ameritrade TOS

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EPR Properties

If you’ve been following the financial news lately, you’ve probably seen headlines about meme stocks like AMC Entertainment (NYSE: AMC) making big waves in the stock market. But one REIT that could be a quiet beneficiary of the meme stock frenzy is EPR Properties. For those unfamiliar, EPR Properties invests in entertainment properties and movie theaters chain AMC happens to be its biggest tenant. 

The firm is poised to benefit immensely when the economy fully reopens. With properties including movie theaters, ski venues, wellness and fitness centers, amusement parks, and more under its belt, EPR stock is easily one of the best-reopening stocks to have on your watchlist. A post-pandemic reset and hunger for leisure spending after an unprecedented year presents a big opportunity for investors. With EPR stocks still trading for about 24% lower than where they started out in 2020, there could be lots of room for upside as the reopening continues.

best real estate stocks to buy right now (EPR stock)
Source: TD Ameritrade TOS

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Simon Property Group

Coming up next, Simon Property Group is one of the largest REITs and shopping mall operators in the U.S. The growth of e-commerce has many worrying that physical shopping will be greatly affected. And I don’t blame you for that as most of us would agree that online shopping has brought great convenience to us. But one thing we must recognize is that the in-person shopping experience is hard to replicate. In fact, it is probably something that many would crave during this pandemic.

Now that shopping malls are reopening all over the U.S., this is great news for Simon Property Group. After all, it is the biggest owner of shopping malls in the country with 203 properties and counting. Despite the retail landscape still hurting from the pandemic, Simon was able to beat analyst expectations. While the bump in retail sales is likely a combination of pent-up demand and stimulus aids from the government, the risks of lower demand and foot traffic remains. Nevertheless, with the reopening of the economy, would you be betting on SPG stock?

top real estate stocks (SPG stock)
Source: TD Ameritrade TOS

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