Which A-REIT stocks should you buy to hedge against inflation?
Published by: Lucien Paulemil
May 20, 2022 6:25 am
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.
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.
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.
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.
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%!
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