Hot inflation and fears of potential stagflation have led the S&P 500 index to drop 18% so far this year. An investing mindset that is oriented toward the long term rather than obsessing over the near term is arguably the best way to achieve strong results as an investor. Because as concerning as possible stagflation is to investors, this too shall pass if it does indeed come to fruition.
Here are two real estate investment trusts (REITs) for investors with $1,000 to consider loading up on for their portfolio.
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1. National Retail Properties
National Retail Properties (NNN 0.50%) is a triple net lease REIT with 3,271 properties in 48 U.S. states. This means that its tenants are responsible for paying a base rent check each month, as well as covering maintenance, insurance, and tax expenses for each leased property.
NYSE: NNN
Key Data Points
The REIT specializes in purchasing single-tenant, freestanding retail properties. The appeal to prospective clients is that selling properties to National Retail Properties is a way to leverage the value of their real estate assets. This gives businesses access to the capital necessary to repay debt and execute on expansion plans.
And National Retail Properties releases these properties to its clients on terms that are favorable to the REIT: National Retail Properties' initial lease terms are 15 to 20 years. This builds in predictable rent revenue for the company.
All of these characteristics are how the REIT has raised its dividends paid to shareholders for 32 consecutive years. For context, this is the third-lengthiest dividend growth streak for a REIT and longer than 99% of all publicly traded companies. And with a 66.9% dividend payout ratio in the first quarter of 2022, National Retail Properties' dividend has room to keep growing around the mid-single digits annually.
This is attractive considering that the REIT yields 4.8%, which is triple the S&P 500 index's 1.6%. And income investors can snatch up shares of National Retail Properties at a forward price-to-adjusted funds from operations (AFFO) per share of 14.1.
2. Simon Property Group
With a $33 billion market capitalization, Simon Property Group (SPG +1.08%) is the largest mall owner in the United States. The company owns or has interests in 232 shopping, dining, entertainment, and mixed-use properties making up 186 million square feet in North America, Asia, and Europe.
NYSE: SPG
Key Data Points
A recent survey of consumers found that 76% of individuals prefer to spend their money on experiences rather than goods. Due to Simon Property Group's extensive knowledge of this fact, it's not surprising to learn that the company was redeveloping six of its properties as of the first quarter. The company's experiential additions to its properties like food courts, restaurants, and aquariums should go a long way in adapting to changing consumer preferences.
Simon Property Group's 61.1% dividend payout ratio in the first quarter gives the company flexibility to grow its dividend moving forward. Before even considering the stock's dividend growth potential, Simon Property Group provides investors with a whopping 6.7% starting dividend yield. And shares of the stock can be scooped up at a forward price-to-FFO-share ratio of just 8.7.
