5 REITs stock to watch ahead of CPI data in November - Kalkine Media

November 07, 2022 04:22 AM PST | By Rupam Roy
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  • The OHI stock was up about nine per cent in 2022 through November 4.
  • VICI Properties Inc. (NYSE: VICI) noted a 100 per cent growth in its Q3 FY22 revenue.
  • National Health Investors, Inc. (NYSE: NHI) would be reporting its Q3 FY22 earnings release on Tuesday, November 8.

The real estate sector comprises firms that own and manage real property. One of the most common categories of the sector is real estate investment trusts (REITs).

There is a flurry of companies comprising the sector. Some of them are Omega Healthcare Investors, Inc. (NYSE: OHI), VICI Properties Inc. (NYSE: VICI), LTC Properties, Inc. (NYSE: LTC), Gaming and Leisure Properties, Inc. (NASDAQ: GLPI), and National Health Investors, Inc. (NYSE: NHI), among others.

REITs are a special kind of real estate segment that owns real estate properties. Investors typically explore the real estate sector hoping to create a portfolio that would provide them with a stable income through dividends and certain tax advantages.

However, it entirely depends on the investors' decision and how they are willing to make the portfolio. Some investors consider the sector a stable stream of income provider, as about 90 per cent of the companies' total taxable income is generally distributed among the shareholders as dividends.

Now, given the mounting concerns over inflation, the market participants are exploring opportunities in the segment more. The inflation has so far shown minimal signs of decline despite the continuing aggressive measures by the Federal Reserve.

Some analyts believe that often investors take shelter under the REIT stocks, as they generally provide regular dividends. 

The companies generally enjoy a regular increase in rent, especially during times of higher inflation, when the rent also increases. In other words, the growth in their income somewhat moves in tandem with the increasing or decreasing costs.

Let's look into the recent performance and other key details about these stocks amid a volatile trading scenario in the market.

Omega Healthcare Investors, Inc. (NYSE: OHI)

As the name suggests, Omega Healthcare is one of the major healthcare-focused REIT firms with a dividend yield of 8.6 per cent. The company's stock was up over nine per cent YTD and about eight per cent YoY.

In the running quarter, it gained over nine per cent after closing at US$ 32.37 last Friday, November 4.

Omega Healthcare Investors Inc's revenue was US$ 239.43 million in Q3 FY22, compared to US$ 281.67 million in the year-ago quarter, and its diluted EPS totalled US$ 0.43 per share, against US$ 0.58 apiece in Q3 FY21.

The company announced a cash dividend of US$ 0.67 per share on October 21, which would be payable on Tuesday, November 15.

VICI Properties Inc. (NYSE: VICI)

The REIT firm specializing in casino properties, VICI Properties' dividend yield was 4.87 per cent. The company's stock, which primarily engages in gaming, hospitality, and entertainment-related properties, rose over four per cent YTD and seven per cent YoY.

In the continuing quarter, it added about five per cent after closing at US$ 31.43 on November 4. Meanwhile, the REIT company announced an 8.3 per cent jump in its quarterly cash dividend of US$ 0.39 per share during its third-quarter financials release.

VICI Properties' revenue surged 100 per cent YoY to US$ 751.5 million in Q3 FY22, and its net income was US$ 330.9 million, against US$ 161.9 million in Q3 FY21.

LTC Properties, Inc. (NYSE: LTC)

The US$ 1.57 billion healthcare-focused REIT firm, LTC Properties, holds a dividend yield of 5.96 per cent. The LTC stock rose around 14 per cent YTD and nearly 20 per cent YoY.

LTC Properties Inc's net income totalled US$ 0.32 per diluted share on revenue of US$ 43.5 million in Q3 FY22, against an income of US$ 0.28 per diluted share on revenue of US$ 37.47 million in Q3 FY21.

Third quarter earnings highlights of Gaming and Leisure Properties Inc (GLPI)Source: ©Kalkine Media®; © Canva via Canva.com

Gaming and Leisure Properties, Inc. (NASDAQ: GLPI)

The major REIT firm specializing in casino properties, Gaming, and Leisure Properties' dividend yield was 5.63 per cent. The stock of the US$ 12.87 billion market cap gaming and entertainment REIT firm rose over two per cent YTD and about three per cent YoY.

Gaming and Leisure Properties' net income was US$ 226.2 million on revenue of US$ 333.8 million in Q3 FY22, versus an income of US$ 149.1 million on revenue of US$ 298.7 million in Q3 FY21.

The REIT firm now expects its Adjusted Funds From Operations (AFFO) to be between US$ 918 million and US$ 923 million for the year ending on December 31, 2022, or to be in the range of US$ 3.52 to US$ 3.54 per diluted share and OP units.

National Health Investors, Inc. (NYSE: NHI)

The healthcare REIT, National Health Investors' dividend yield was 6.54 per cent. The company, which primarily focuses on investing in senior housing and medical facilities, lost over three per cent of its stock price while adding over four per cent YoY.

The company intends to release its Q3 FY22 earnings release on Tuesday, November 8. Meanwhile, in Q2 FY22, National Health Investors' net income was US$ 21.67 million, against US$ 39.18 million in Q2 FY21.

Bottom line:

Real estate stocks or portfolios comprised of these assets are often considered a hedge against inflation. Meanwhile, the CPI rose 0.4 per cent in September, and 8.2 per cent on an annual basis, after marking its 40-year highest advancement in June 2022.

On the other hand, the core CPI advanced at a 6.6 per cent rate on an annual basis, which was the highest since 1982.

The CPI data, which is a favourable gauge for inflation, is expected to come out this week, which would provide more insights on the impact of the Fed's latest move in tackling the soaring costs. The Federal Reserve declared another 75 bps point jump in their benchmark interest rates in November.

On the other hand, the midterm election is also scheduled this week, which might also play an important role in the market's future swings. Looking at the performance of the real estate sector, the S&P 500 real estate index, which is comprised of the real estate companies present in the S&P 500 index, fell over 24 per cent YoY, and more than 30 per cent YTD through November 7.


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