Stock prices rise and fall, but the overall trend has been inexorably higher over the past century or so. That's not to say there haven't been tough times. The Great Depression, the Dot-Com collapse, the Great Recession, and whatever we end up calling this period we're in now are obvious examples.
That said, now could be a very good time to plunk a few dollars in one segment of the equities market that tends to hold up well in both up and down markets: Real estate. A good way to get started in real estate investing is through real estate investment trusts (REITs).
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REITs own portfolios of income-producing property and are required by tax law to pay out at least 90% of their taxable income to shareholders. They operate across multiple real estate sectors. Two of my favorites -- Agree Realty (ADC 1.31%) and Medical Properties Trust (MPW -8.68%) -- specialize in retail and healthcare properties, respectively.
Either of these would be a good landing spot for $1,000 in investable income. Here's why.
Agree Realty
Agree Realty has a portfolio of about 1,400 properties that it leases to what it calls industry-leading, omnichannel retail tenants in 47 states. Grocery stores are its biggest client sector, and Walmart is its largest individual tenant.
Agree boasts a compound average annual return of 13% since going public in 1994, and last fall its dividend was boosted by 9.8% to $0.227 per share per month. That's right, per month. This is one of a dozen or so REITs that pay monthly dividends, adding to its attractiveness as an income choice.
Agree stock has taken a bit of a beating so far in 2022, down about 10% at this writing, and about the same as the S&P 500. Trading at about $64.55 a share, it has a respectable yield of about 4.26%.
This is also a growth-minded company. Detroit-based Agree added 290 net-lease properties to its portfolio in 2021, an investment of $1.39 billion it plans to match with another $1.1 billion to $1.3 billion in buys this year. The company said it's adding to its portfolio at a record pace, and that lends confidence to buy-and-hold investors who figure this could be a good ride for them, too.
Medical Properties Trust
Medical Properties Trust is based in Birmingham, Alabama, and is one of the world's largest private owners of hospitals, holding a portfolio of 438 facilities and 46,000 beds in nine countries, primarily across the United States.
MPT has posted a total shareholder return of 661% since going public in July 2005, which it says is a 341% beat on its benchmark, the Dow Jones U.S. Real Estate Health Care Index. The company has also raised its dividend for nine straight years, most recently by 4% in February to $0.29 a share. This healthcare REIT's stock has been pushed down nearly 15% so far this year, giving it a nice yield of about 5.54% at a share price of about $20.21 at the time of this writing.
Looking ahead, MPT is projecting another good year as it grows its income from long-term holdings while integrating the operations of recent acquisitions. Funds from operations (FFO) were $1.036 billion, or $1.75 per share, in 2021, up from $831 million and $1.57, respectively, from 2020. The company said it expects that to reach $1.81 to $1.85 per share this year.
$1,000 is money well staked in either of these
Nothing is a sure bet in the stock market, but these two REITs have many of the characteristics that appeal to me in a buy-and-hold, with my bent for total return stocks with an emphasis on income, especially in these days of market corrections.
Their portfolios are heavily into essential businesses, with portfolios that are diversified both geographically and by operators. Executive leadership is headed up by company founders or their family members with big skin in the game, and they're investing in growth themselves. Either or both are good candidates for that $1,000 you might have parked and waiting to invest.
