This is the top pick across Wall Street in the net lease group, and it is an ideal stock for investors who are more conservative. VICI Properties Inc. (NYSE: VICI) is a triple net lease REIT that was spun out of Caesars Entertainment post-bankruptcy.
The company has 23 mixed-use gaming, lodging and entertainment properties in its portfolio, and a subsidiary that owns four championship golf courses. VICI also owns roughly 34 acres of undeveloped land in Las Vegas, which it leases to Caesars.
Shareholders receive a 4.92% distribution. The BofA Securities price target of $36 compares with the $33.42 consensus target for VICI Properties stock. Shares closed on Thursday at $29.25.
This is a large net lease REIT with an incredible distribution for income buyers. W.P. Carey Inc. (NYSE: WPC) ranks among the largest net lease REITs, with an enterprise value of approximately $18 billion and a diversified portfolio of operationally critical commercial real estate that includes 1,215 net lease properties covering approximately 142 million square feet, as of September 30, 2020.
For nearly five decades, the company has invested in high-quality single-tenant industrial, warehouse, office and retail properties subject to long-term leases with built-in rent escalators. Its portfolio is located primarily in the United States and northern and western Europe, and it is well diversified by tenant, property type, geographic location and tenant industry.
Net lease REITs generally rent properties with long-term leases (10 to 25 years) to high credit-quality tenants, usually in the retail and restaurant spaces. “Net lease” refers to the triple-net lease structure, whereby tenants pay all expenses related to property management: property taxes, insurance and maintenance.
Investors receive a 5.40% distribution. Wells Fargo has a big $90 price target. The consensus target is $86, and W.P. Carey stock closed Thursday at $77.98.
These six top REITs pay dependable distributions near or above the 5% level. With the prospect of continued low interest rates for the foreseeable future, and the stock market extremely risky and overbought, it makes sense to have solid assets like real estate. It is important to remember that REIT distributions can contain return of principal.