What happened
Shares of Agree Realty (ADC 1.16%) rose just over 1% during the first half of 2022, according to data provided by S&P Global Market Intelligence. While that might not sound all that impressive, it's noteworthy considering that the S&P 500 declined nearly 21% during that period.
Here's a look at why the monthly dividend-paying real estate investment trust (REIT) was up in a period when the market was down sharply.
So what
Agree Realty has reported strong financial results this year. In February, the retail REIT posted its fourth-quarter results for 2021, delivering a 9.2% increase in its adjusted funds from operations (AFFO) per share. The REIT benefited from committing to invest a record $1.43 billion in acquiring 297 net lease retail properties last year.
That enabled the REIT to continue growing its dividend. Agree Realty gave its investors a 3.1% raise over its prior monthly payment in April. That new dividend payment level was also 7.8% above the year-ago level.
Agree Realty reported even stronger first-quarter results in May. The REIT grew its AFFO per share by 16.4%, driven by the continued expansion of its portfolio. It invested another $430 million to acquire an additional 124 net leased retail properties. That strong start to the year enabled the REIT to increase its acquisition guidance. It now expects to complete $1.4 billion to $1.6 billion of deals this year. It has a solid financial profile to support that expansion, which should enable the company to continue growing its monthly dividend.
Analysts have also liked what they've seen from Agree Realty this year. For example, in late June, Credit Suisse analyst Tayo Okusanya initiated coverage on the REIT, giving it an outperform rating while setting a $78 price target and naming it a top pick. Okusanya pointed to Agree Realty's high-quality portfolio, which the analyst believes is trading at a discount, and its solid growth outlook.
Meanwhile, several other analysts upgraded the stock and raised their price targets in recent months. They pointed to the company's more defensive business model and growth prospects as reasons they're bullish on the REIT.
Now what
Agree Realty has been one of the few stocks that have delivered a positive return this year. The REIT is rapidly expanding its portfolio of income-producing real estate, enabling it to continue growing its monthly dividend. That makes it an excellent option for investors seeking to make passive income.
