REIT stocks have crashed in 2022 as worries of high-interest rates surge. The Schwab U.S REIT ETF has plunged by more than 32% from the highest level this year and is trading at the lowest level since November 2022. Here are the best blue-chip REIT stocks to buy in 2022.
Realty Income
Realty Income (NYSE: O) is one of the biggest REIT companies in the world with a market cap of over $35 billion. It is a monthly REIT stock that is also a dividend aristocrat since it has boosted its dividends in the past 29 straight years.
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Realty Income owns properties across the United States. It has over 11,400 commercial properties under long-term, net-lease agreements. According to its website, it has an occupancy rate of almost 100%. Some of its clients are 7-Eleven, Lowe’s, and Chipotle.
Realty Income stock price has had a tough year this year. After soaring to a high of $75 in August, it has crashed by more than 22% from its all-time high.
I believe that Realty Income is a good stock because of its cheap valuation and the quality of its business. It is trading at an FFO of about 14.5x, which is much lower than its historical average of 17.6x. Most importantly, Realty Income has a forward dividend yield of 5.13%.
Digital Realty Trust
Digital Realty Trust (NYSE: DLR) is another blue-chip REIT to buy in 2022. The company’s stock price has crashed by more than 37% in the past 12 months, bringing its market cap to over $25 billion. This decline has happened because of the overall performance of the tech sector. Analysts believe that the company will suffer as companies slash their IT spending.
Still, Digital Realty is a good stock to invest because of its substantially lower valuation. In addition, almost 90% of its debt is fixed rate, meaning that the impact of high rates will be minimal. Its business will also continue doing well in the coming months.
AvalonBay Communities
Store Capital (NYSE: AVB) is a REIT company that has a total market cap of more than $23 billion. It is a blue-chip REIT company that owns 299 apartment communities with over 89k apartment homes. It operates in 12 states and the District of Columbia.
AvalonBay stock price has crashed by more than 25% in 2022 and more than 32% from the highest point this year. Still, AvalonBay is a good company that is reasonably valued and has a dividend yield of 4.3% and a price to AFFO of 16.3x.
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