Evaluating relative strength is important when determining which stocks to buy. Relative strength shows which sectors or individual issues are outperforming market peers. In general, 2022 was a terrible year for the stock market, and with rising interest rates and recessionary fears, most real estate investment trusts (REITs) did not fare well.
But some pockets of relative strength are beginning to emerge among the universe of REITs, and income investors who are looking ahead to 2023 would be wise to consider those REITs that have recently shown the greatest relative strength.
With that in mind, take a look at the four best-performing REITs in December, a group whose recent track record could put them at the head of the class for gains in 2023.
Braemar Hotels & Resorts (NYSE: BHR) is a Dallas-based REIT that invests in luxury hotels and resorts across the U.S. and in Puerto Rico. Braemar Hotels & Resorts now has investments in 17 properties with over 4,200 rooms.
Braemar Hotels & Resorts was a very poor performer over the first 11 months of 2022, losing 31% of its value. But it bounced back strongly this month, rising 11.41% to lead all REITs in December.
The main driver of its price rise was Braemar Hotels & Resorts announcing a stock repurchase program of up to $25 million. In addition, the board of directors gave shareholders an early holiday present when it declared an increase in the quarterly dividend from $0.01 to $0.05 per share. Braemar Hotels & Resorts also announced the closing on its acquisition of the Four Seasons Resort Scottsdale at Troon North Golf Club in Scottsdale, Arizona.
AGNC Investment Corp. (NASDAQ: AGNC) is a Bethesda, Maryland-based mortgage REIT (mREIT) that invests in U.S. government-guaranteed pass-through securities and collateralized mortgage obligations. It pays a monthly dividend of $0.12 per share, and the $1.44 annual payment yields 13.7% on its most recent closing price.
Despite analyst downgrades in December from Zacks Investment Research and Ford Equity Research, as well as a negative comment by Jim Cramer on “Mad Money,” AGNC Investment Corp. still managed to gain 4% this month, following up on a 21% rise in November after beating expectations on its third-quarter earnings report.
One reason for the price increase was the announcement that billionaire Bond King Bill Gross was buying shares of AGNC and Annaly Capital Management Inc. (NYSE: NLY).
Getty Realty Corp. (NYSE: GTY) is a Jericho, New York-based retail REIT that specializes in owning, leasing and financing 1,021 free-standing auto-related properties across 38 states and Washington, D.C.
Almost three-quarters of Getty Realty’s properties are gas stations and convenience stores. Another 12% are car washes, and 11% are automotive repair shops, with the remainder being auto service and auto parts stores. At the end of the third quarter, its property occupancy rate was 99.6%.
Getty Realty has been on a tear the last few months after a good third-quarter report and increasing its dividend from $1.58 per year to a forward $1.72 during 2022.
Getty Realty shares were up 3.02% in December.
Realty Income Corp. (NYSE: O) is a San Diego-based retail REIT that owns and operates over 11,400 commercial properties worldwide with long-term net lease contracts in which the tenant is responsible for the majority of operating costs, including taxes, insurance and maintenance.
Realty Income’s tenant list includes large, well-known investment-grade companies, such as Walgreens Co., Dollar General Corp. (NYSE: DG), FedEx Corp. (NYSE: FDX) and Dollar Tree (NASDAQ: DLTR). Investors know that even if 2023 brings about a hard recession, these are companies that will not have difficulty paying rent. As of the third quarter, Realty Income’s rent collection on investment-grade tenants was 99.9%.
Realty Income is one of 65 S&P 500 Dividend Aristocrats, meaning it’s increased its dividends for at least 25 consecutive years.
Driving Realty Income’s shares higher this month was the news that Gregory J. Whyte has been appointed executive vice president and chief operating officer beginning Jan. 3. In addition, Realty Income declared its 628th consecutive monthly dividend and increased its dividend from $0.248 to $0.2485 per share.
Realty Income gained 1.94% in December and looks like it could continue its success this month into 2023.
Weekly REIT Report: REITs are one of the most misunderstood investment options, making it difficult for investors to spot incredible opportunities until it’s too late. Benzinga’s in-house real estate research team has been working hard to identify the greatest opportunities in today’s market, which you can gain access to for free by signing up for Benzinga’s Weekly REIT Report.
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