income builder 2021 24420.png
apartment REITs
homebuilders ETFs
single family rental REITs
manufactured housing REITs
student housing REITs
data center REITs
Cell tower REITs
net lease REITs
industrial REITs
storage REITs
office REITs
mall REITs
hotel REITs
Timber REITs
healthcare REITs
Billboard REITs
shopping center REIT
Casino REITs
cannabis REITs
farmland REIT investing
mortgage REITs
1/1

Explore our Real Estate Indexes

The Easy Way To Invest in Real Estate

RIET Hoya Capital High Dividend Yield ETF.png
HOMZ_Logo_Just Ticker.png
ETF express.png
  • Alex Pettee, CFA

Hard Landing? • Stocks Tumble • REIT Dividend Hikes

  • U.S. equity markets plunged Thursday as investors digested the Fed's aggressive tightening tack and following data showing a notable slowdown in activity across the employment and housing markets.

  • Retracing all of yesterday's rebound and falling to the lowest level since early 2021, the S&P 500 dipped another 3.3% today - extending its drawdown to over 23%.

  • Real estate equities were broadly lower as well today despite a half-dozen dividend hikes announced yesterday afternoon. The Equity REIT Index declined 2.6% today all 19 property sectors in negative territory.

  • Economic data this morning added further selling pressure as Initial Jobless Claims data showed a notable uptick in unemployment filings while Housing Starts declined to the lowest level since April 2020.

  • A half-dozen REITs raised their dividends over the past 24 hours, bringing the full-year total across the sector to over 70. After the close today, W. P. Carey (WPC) hiked its quarterly dividend for the second time this year.

Income Builder Daily Recap

We recently launched Hoya Capital Income Builder - a premier income-focused investment research service through Seeking Alpha Marketplace - that will be the new exclusive home of all of Hoya Capital's investment research. Income Builder focuses on real income-producing asset classes that offer the opportunity for diversification, monthly income, capital appreciation, and inflation hedging. If you're not already on board, give us a try with a completely risk-free two-week trial and take a look around.

U.S. equity markets plunged Thursday as investors digested the Fed's aggressive tightening tack and following data showing a notable slowdown in economic activity across the employment and housing market. Retracing all of yesterday's rebound and falling to the lowest level since early 2021, the S&P 500 dipped another 3.3% today - extending its drawdown to over 23% - while the tech-heavy Nasdaq 100 dipped 4% to the lowest level since the initial COVID vaccine approvals in November 2020. Real estate equities were broadly lower as well today despite a half-dozen dividend hikes announced yesterday afternoon. The Equity REIT Index declined 2.6% today all 19 property sectors in negative territory while the Mortgage REIT Index dipped 6.0%.

Already pointing to a sharply lower open in overnight trading, economic data this morning added further selling pressure as Initial Jobless Claims data showed a notable uptick in unemployment filings over the past two weeks while Housing Starts declined to the lowest level since the depths of the pandemic in April as sharply higher mortgage rates has cooled demand. With calls for a recession growing louder, long-term interest rates pulled back today with the 10-Year Treasury Yield closing the day around 3.20% - sharply lower from its post-GFC highs on Tuesday of 3.50%. All eleven GICS equity sectors were lower on the day with the Consumer Discretionary (XLY) and Energy (XLE) dragging on the downside even as Crude Oil and Gasoline prices remained near decade-highs.

Real Estate Daily Recap

Net Lease: A half-dozen REITs raised their dividends over the past 24 hours, bringing the full-year total across the sector to over 70. After the close today, W. P. Carey (WPC) hiked its quarterly dividend for the second time this year to $1.059/share. Yesterday afternoon, Safehold (SAFE) - which we hold in the new Landowner Portfolio - hiked its quarterly dividend by 4.1% to $0.177/share. We've now seen more than 70 equity REITs raise their dividend this year along with another half-dozen mortgage REITs. In our State of the REIT Nation report, we noted that FFO growth has significantly outpaced dividend growth over the past several quarters, driving the dividend payout ratios to just 68.8%, so REITs are well-equipped to deliver another year of robust dividend growth that may meet or exceed the record year in 2021.

Cannabis: AFC Gamma (AFCG) was one of just five REITs in positive-territory on the day after it hiked its quarterly dividend by 2% to $0.56/share. NewLake Capital Partners (OTCQX:NLCP) also hiked its quarterly dividend yesterday afternoon by 6.1% to $0.35/share. In an updated report on the Cannabis REIT sector on Income Builder marketplace, we analyze the reasons behind the sharp declines across the sector this year and our updated outlook. Concerns over tenant credit quality have been the concern this year as tightening monetary policy and stalled legislative progress on federal marijuana legalization have sent valuations of cannabis cultivators plunging. Cannabis REITs have thrived in recent years despite weakness across the broader cannabis sector, benefiting from the murky and often contradictory regulatory framework of legalized marijuana.

Single-Family Rental: Yesterday, we published Single-Family Rental REITs: Shelter From Stagflation. Amid mounting recession worries and a return of heart-stopping market volatility, residential REITs - particularly the traditionally countercyclical single-family rentals - should prove to be a source of relative shelter. SFR REITs were born from the last economic crisis when a cascade of foreclosures enabled a new class of institutional rental operators to emerge by buying distressed properties en-masse. Similar distress in the U.S. housing market is highly unlikely given the underlying supply constraints resulting from a decade of underbuilding, and ironically, due to the presence of well-capitalized institutional investors. SFR REITs enter this uncertain period on solid footing, benefiting from historically favorable Buy vs. Rent economics.

Mortgage REIT Daily Recap

Per the REIT Rankings Tracker available to Income Builder subscribers, mortgage REITs were also sharply-lower today with residential mREITs dipping 6.5% while commercial mREITs declined by 3.9%. Ladder Capital (LADR) was among the outperformers today after hiking its quarterly dividend by 10% to $0.22/share while BrightSpire (BRSP) was also an outperforming after hiking its quarterly dividend by 5.3% to $0.20/share. Three mREITs are now lower by more than 20% on the week - Invesco Mortgage (IVR), AG Mortgage (MITT), and Redwood Trust (RWT).

In Mortgage REITs: Everything In Moderation, we highlighted the potential risks related to rate volatility while noting that - even the double-digit average dividend yield - most mREIT dividends are covered by EPS and not at immediate risk of reductions. We've now seen 12 mortgage REITs raise their dividend this year compared to four dividend reductions.


REIT Preferreds & Capital Raising

Per the Income Builder Preferred Tracker available to Income Builder subscribers, REIT Preferred stocks lower higher by 1.11% today, on average, following a rough start to the week. REIT Preferreds are lower by roughly 13% on a total return basis this year after ending 2021 with price returns of roughly 8.0% and total returns of roughly 14%. There are now roughly 180 REIT-issued exchange-listed preferred and debt securities with an average current yield of 7.06%. Over in the capital markets today, Realty Income (O) replaced its at-the-market ("ATM") stock sale program with a new forward sale agreement with 19 financial firms to sell up to 120M shares of its common stock. It had sold ~65.7M shares of the ~69.1M shares available under the prior ATM program.

Economic Data This Week

We'll publish a full analysis and commentary of this week's developments in the real estate industry, as well as an analysis of the busy week of economic data in our Real Estate Weekly Outlook published this weekend.

Access Our Complete Research Library

We recently launched Hoya Capital Income Builder - the new premier investment research service focused on real income-producing asset classes. Whether your focus is High Yield or Dividend Growth, we’ve got you covered with high-quality, actionable investment research and a comprehensive suite of tools and models to help build sustainable portfolio income targeting premium dividend yields of up to 10%. And of course, subscribers receive complete access to our investment research - including reports that are never published elsewhere - from Hoya Capital and our team of contributors.

Disclosure: Hoya Capital Real Estate advises two Exchange-Traded Funds listed on the NYSE. In addition to any long positions listed below, Hoya Capital is long all components in the Hoya Capital Housing 100 Index and in the Hoya Capital High Dividend Yield Index. Index definitions and a complete list of holdings are available on our website.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.