Top 3 inflation-proof REITs to buy amid high interest rates

on May 30, 2022
  • REITs have outperformed the broader market in 2021.
  • Life Storage is able to easily adjust its prices.
  • PotlatchDeltic and Weyerhaeuser are great forest REITs.

Real Estate Investment Trusts (REITs) have had a mixed year. The Schwab REIT ETF has dropped by about 8% year-to-date while the S&P 500 has fallen by over 11%. With interest rates set to rise, REITs could do well this year. Here are some of the top-rated REITs to invest in in 2022.

Life Storage (LSI)

Life Storage (NYSE: LSI) is a leading self-storage company in the US with a market cap of over $10 billion. The company acquires and manages companies in the space throughout the country. It now owns about 1,100 storage facilities in 36 states

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Life Storage operates in one of the most stable industries in the US economy considering that self-storage is expected to keep growing. In its most recent quarter, the company said that it had an occupancy rate of almost 95%. With inflation rising, the company is also expected to benefit as it boosts its prices. This is possible since the company uses a monthly re-pricing model. 

Life Storage has a forward dividend yield of 3.40%, which is higher than the S&P 500 average. In the past five years, the company has had a 7% dividend growth rate. According to SeekingAlpha, it has a quant rating of 4.53 and a Wall Street rating of 4.41. 

Weyerhaeuser (WY)

Weyerhaeuser (NYSE: WY) is a leading company that is set to benefit as inflation rises. It is a $30 billion company that has over a century of experience in managing forests. It owns over 10.6 million acres of timberlands under long-term licenses in the United States and 14.1 million in Canada. The firm operates in three key segments, including timberlands, wood products, and real estate, energy, and natural resources. 

This makes it one of the best inflationary REIT to invest in since the company can easily adjust its prices without losing demand. The firm has a profitability grade of A+ and a momentum grade of A-. SeekingAlpha authors and Wall Street have a strong buy rating.

PotlatchDeltic (PCH)

PotlatchDeltic (NASDAQ: PCH) is another top REIT to invest in. The company is similar to Weyerhaeuser in that it owns over 1.8 million scres of timberlands in 6 states. It makes its money through timberland, wood products, and real estate products. 

The company has been doing well in the past few years. Its revenue jumped from over $525 million in 2012 to over $1.33 billion in 2021. As a result, its total income has surged to over $422 million and this trend will likely continue. PotlatchDeltic has a dividend yield of over 1.77%.

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