Which A-REIT stocks should you buy to hedge against inflation?

A real estate investment trust (REIT) is a company that primarily invests in real estate. In Australia, these entities are referred to as A-REITs. 

A-REITs invest in various types of real estate including – but not limited to – residential properties, office buildings, industrial property, and shopping malls. In sum, any properties that can be rented, leased, or bought and sold for a profit fall in the scope of an A-REIT’s mandate.

Historically, real estate is a fantastic hedge against inflation, as property prices steadily increase over time. With Australian inflation rates affecting the nation’s purchasing power, investors are considering real estate investing as a way to protect their wealth.

Here is a list of the top 5 A-REIT stocks, buy to hedge against inflation.

Goodman Group (ASX: GMG)

Founded in 1989 by Gregory Goodman, Goodman Group is an A-REIT that invests primarily in warehouses, large-scale logistics facilities, as well as business and office parks in Australia and around the world.

With a dividend yield of 1.31% and a total return of 191% over the past 5 years, this is one of the best A-REITs stocks Australian investors can purchase.

Dexus Property Group (ASX: DXS)

Second on our list is Dexus Property Group, an A-REIT with a real estate portfolio valued at $42 billion. 

Contrary to most A-REITs, Dexus invests exclusively in Australia, where it owns $17.5 billion worth of office, industrial, and healthcare properties located in Sydney, Melbourne, Perth, and Brisbane. In addition, Dexus manages an additional $25 billion worth of the same types of properties on behalf of third parties. 

While this A-REIT’s stock price has not yet recovered from the broad COVID-19 sell-off, it presents an attractive 4.68% dividend yield that income-seeking investors may consider snapping up before the stock price fully recovers.

GPT Group (ASX: GPT)

GPT Group is arguably one of the largest and most diversified A-REITs listed on the ASX. Indeed, GPT is specialized in active ownership of retail office logistics and business park assets. In total, GPT Group’s portfolio value exceeds $20 billion. 

Much like Dexus, GPT Group’s stock price has yet to recover from its COVID-19 lows. However, this is good news for dividend lovers, as the stock currently offers a 4.5% dividend yield.

What’s more, GPT Group is a leader on the Dow Jones Sustainability Index and undeniably one of the best A-REIT stocks when it comes to international sustainability benchmarks. 

Charter Hall Group (ASX: CHC)

The fourth best A-REIT stock on our list is Charter Hall Group, a property group that manages listed and unlisted property funds on behalf of its wholesale, institutional, and retail clients. 

With a total return of 172% since 2017 and a dividend yield of 2.46%, this A-REIT stock is an interesting option for investors looking for both capital appreciation and regular income.

BWP Trust (ASX: BWP)

The fifth A-REIT stock on our list is BWP Trust, a property management firm that was created in 1998.

Headquartered in Australia, this A-REIT is smaller than the other mega-firms listed in this article, but don’t let that fool you, as it is also one of the most profitable. Indeed, its recent quarterly financials reveal this A-REIT generated $174 in net income, and a profit margin of 459%!

These stellar results explain why this A-REIT stock has generated a total return of 43% since 2017, and currently offers a very attractive dividend yield of 4.38%.

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