Innovative industrial properties (WKN: A2DGXH) and WP Carey (WKN: A1J5SB) are currently top REITs with over 5% yield. Let’s start with the comparison at this point: The US all-rounder is currently paying investors $ 1,057 per tonne. quarter, which equates to a return of 5.52% at a price of $ 76.48.
While cannabis REIT, investors pay $ 1.75 quarterly. At a stock price of $ 127.80, this equates to a dividend of 5.47%. Measured on these key figures, the valuation situation is in fact largely identical. What makes them different, however, are the opportunities, the opportunities and the risks. But also the question of how long you can get which REIT with such a value.
WP Carey: 5% dividend and a top REIT
To me, WP Carey is something along the lines of the all-rounder among the REITs. Not only is a dividend of well over 5% possible here, but there is also a story that has offered a constant, annually growing dividend since the listing in 1998. True, dividend growth is very slow right now, at less than 1%. But there is a chance that something will change.
Following the corona pandemic, the focus is not only on the 5% yield, but also on the turnaround. In addition, inflation is a construction site for which there is a solution: contractually guaranteed rental growth that adapts to the inflation rate. So now is a good time to prioritize this protection against inflation. With a dividend yield of more than 5%, a dividend kick is also possible.
Nevertheless, a yield of more than 5% is not uncommon for top REIT WP Carey. Values between 4 and 6% are the order of the day. If I were to make a spontaneous decision now, this real estate investment fund would certainly not be the wrong choice. But also one that you will probably get in a few months or a few years in one way or another.
Innovative industrial properties: the opportunity!
Innovative Industrial Properties is also a top REIT. Only with a significantly different risk-reward ratio. The 100 properties alone show that the diversification is at a completely different level compared to WP Carey with almost 1,300. The focus on the cannabis industry also comes with its own set of risks that are common in the industry. In times of inflation, it can also affect tenants, among other things.
With a current yield of over 5%, Innovative Industrial Properties is really cheaply rated for a REIT with a recent FFO growth of around 40% year over year and a price-to-FFO ratio of under 20. Growth is a very crucial element . Despite its growth history, this real estate investment fund is valued in line with other quality stocks of its kind.
That’s why this top REIT with over 5% yield is now my favorite. It’s just very rare at this level. Nevertheless, there is a higher level of volatility and a shortseller report, after which the business model in the cannabis industry is legally somewhat critical. But anyone who believes in this growth story can access these favorable conditions.
Top REIT with 5% yield!
Therefore, if I had to decide now, my choice of a top REIT with a yield of more than 5% would fall on Innovative Industrial Properties. This is primarily due to the rare opportunity to get this growth quality at this price. WP Carey is certainly not the worse choice, just the more defensive one that one often gets in this assessment.
The article IIPR vs. WPC: My current top REIT with a yield of 5%! first appeared on The Motley Fool Germany.
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Vincent owns shares in Innovative Industrial Properties and WP Carey. The Motley Fool owns shares in and recommends Innovative Industrial Properties.
Broget Fool Germany 2022