Every investor should have tools to combat the effects of inflation. Indeed, one of the best tools in one’s toolkit to do so happens to be real estate. With inflation expectations rising, and bond yields (and therefore mortgage rates) remaining low, real estate plays could outperform.
For those looking for real estate exposure today, my two top REITs I’d recommend investors consider are WPT Industrial REIT (TSX:WIR.U) and Killam Apartment REIT (TSX:KMP.UN).
WPT Industrial REIT
WPT is an industrial real estate player. The company’s portfolio of warehouse and distribution facilities in the U.S. provides extremely stable cash flows. Additionally, these cash flows are ones I expect to rise over time.
Well, WPT’s properties are uniquely exposed to the rise in e-commerce activity we’re seeing of late. The company’s tenants are primarily blue-chip companies, many of which have direct ties to the e-commerce trade. And the company’s occupancy rate of nearly 100% indicates demand for these properties is much higher than supply at the moment.
Accordingly, I expect WPT’s already impressive fundamentals to continue to improve over time. The REIT’s 4.3% dividend yield provides meaningful income to long-term investors in need of reliable cash flows over time. And the company’s modest payout ratio and rising NOI provide the potential for additional income increases over time for investors.
These factors make this REIT one of my top picks for long-term investors today. Those bullish on the continued strength we’ve seen in this asset class over the long-term have a steal with this REIT today.
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Killam Apartment REIT
Another asset class I’m highly bullish on in the real estate sector is residential real estate.
Killam’s portfolio of high-quality residential and mixed-use buildings focused in Atlantic Canada make this REIT a top-notch option for investors. Killam offers better fundamentals than most of its peers, given its leverage to this market. I like the geographical focus of Killam, as well as its underlying fundamentals right now. This mix provides what I view as best-in-class growth potential among residential REITs today.
Killam provides investors with a lower yield of around 3.5% at the time of writing. Much of this lower yield has been due to capital appreciation of late. Indeed, Killam is currently trading right around its 52-week high, at the time of writing.
Nonetheless, I expect this REIT to provide long-term investors with double-digit annual returns over time. That’s certainly good enough for me.
Like these top REIT options? Here are a few more high-growth options to consider today:
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool owns shares of Killam Apartment REIT.