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3 high-potential stocks you should buy in a heartbeat


From time to time, the market offers investors excellent buying opportunities. While they’re not fun if you’re just holding or wanting to sell, they’re useful if you’re continuing to add to your portfolio. As the stock market tumbles this year on inflation and interest rate fears, many stocks are trading at more attractive valuations.

One sector that has been hit hard is real estate investment trusts (REITs), with the average REIT falling more than 11%. This liquidation offers excellent buying opportunities for long-term investors. Three REITs that stand out as attractive buys right now are American tower (NYSE: AMT), Digital real estate (NYSE: DLR)and Invitation houses (NYSE: INVH).

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Big investments in future growth

American Tower’s stock price has fallen 12% from its recent high. Who pushed the data Infrastructure REITsdividend yield up to 2.1%.

This sale comes even though the REIT is growing at a steady pace. Its consolidated adjusted operating funds increased by 15.4% last year, due to higher rental rates, the development of new towers and a considerable number of acquisitions. American Tower spent $20.8 billion last year to acquire 33,000 communications sites — primarily through the purchase of Telxius Towers — and other communications infrastructure, including REIT data center CoreSite Realty.

These agreements will drive growth in 2022 and beyond. The purchase of Telxius Towers included a pipeline of 3,300 new sites that the company will build over the next few years. Meanwhile, its data center acquisitions position it to seize expansion opportunities in this fast-growing industry. The company has a strong balance sheet to fund its organic expansions and continue to acquire data infrastructure. This should allow American Tower to continue to grow its dividend, which it increased by 15% last year.

This regular cultivator is on sale

Digital Realty shares have fallen more than 15% this year. This pushed the data center REIT’s dividend yield to nearly 3.3%.

Digital Realty’s collapse comes even though it has continued to show steady growth. The REIT has grown its base funds from operations per share at a compound annual rate of 10% since 2005. Meanwhile, the company recently increased its dividend by an additional 5%, its 17th consecutive year of increasing the part of investors.

The company plans to continue growing in 2022 and beyond. Digital Realty recently agreed to acquire a majority stake in Teraco, valuing Africa’s leading data center provider at $3.5 billion. It also made two small acquisitions in Africa and Europe while investing in the development of new data centers around the world. With a strong balance sheet, Digital Realty has the financial flexibility to continue to grow its data center portfolio, which should lead to continued dividend growth.

Take advantage of the tight real estate market

Shares of Invitation Homes are down about 10% this year. This helped push up the dividend yield of the Residential REIT focused on single-family home rentals, up nearly 2.2%.

The drop comes amid a hot market for single-family rentals. Invitation Homes saw a 17.3% increase in rental rates on new leases and a 9% growth rate on lease renewals last quarter. The REIT also continued to expand its portfolio, acquiring more than 4,800 homes last year for nearly $2 billion.

The company also improved its growth prospects. He formed a $300 million joint venture with Rockport Group to buy high-end homes for the rental market. Invitation Homes has also invested $250 million in Pathway Homes, a real estate company that helps people buy homes. With the housing market tighter than ever and interest rates rising, Invitation Homes should continue to benefit from rising rental rates. This should allow it to continue growing its dividend, which it increased by nearly 30% last year.

These high-growth REITs are on sale

American Tower, Digital Realty and Invitation Homes benefit from favorable market conditions. This allows them to increase their rates while continuing to expand their real estate portfolios, leading to healthy growth rates. With the recent market sell-off that has lowered their valuations, these REITs seem like good buys right now.

10 stocks we prefer to American Tower
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Matthew DiLallo owns American Tower, Digital Realty Trust and Invitation Homes Inc. The Motley Fool owns and endorses American Tower, Digital Realty Trust and Invitation Homes Inc. The Motley Fool has a Disclosure Policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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