7of the Best Industrial REITs to Buy Now

Investors can count on real estate investment trusts, or REITs, to deliver consistent income and reliable capital appreciation over time. Right now this is especially true of industrial REITs.

REITs are highly specialized companies that invest their assets in income-producing commercial real estate. They make money by collecting rent on properties they own or by earning interest on commercial real estate mortgages or other financial instruments they hold. All REITs distribute a minimum of 90% of their taxable income to shareholders as dividends.

Most REITs specialize in one or just a few classes of real estate. There are retail-focused REITs such as Kimco Realty Corp. (ticker: KIM), REITs that concentrate on multifamily properties like Essex Property Trust Inc. (ESS), and office building REITs like Boston Properties Inc. (BXP). In today’s economic environment, one of the most popular and profitable kinds of REIT is the industrial REIT.

Industrial REITs own buildings and facilities that serve commercial tenants in the industrial sector. Trucking terminals, warehouses, manufacturing operations and industrial parks are all examples of industrial real estate. Data storage facilities and computer server farms can also be considered industrial property, although the industry they serve is decidedly high tech.

Vacancy rates for industrial properties are exceedingly low right now and rental rates are high and growing fast. There are several factors contributing to the ongoing industrial real estate boom. Chief among them is the explosive growth in the e-commerce industry and the fact that U.S. companies are making a concerted effort to fortify their supply chain infrastructure. As long as these trends remain in place, industrial REITs should provide investors with reliable income and excellent growth potential.

Here is an updated list of seven of the best industrial REITs to buy today:

TRNO is an industrial REIT with an impressive market cap of $6 billion. The company owns prime industrial real estate in major U.S. hub markets from coast to coast, including Los Angeles and San Francisco in California and New York and New Jersey along the Eastern Seaboard.

About 77% of the rent TRNO collects comes from warehouse properties which are in high demand right now and should remain so for the foreseeable future. Another 12% comes from an interesting category it calls improved land parcels. Improved land parcels are tracts of land the company owns and rents out to clients as outdoor storage.

Wall Street analysts estimate TRNO will generate $368 million in revenue during its 2024 fiscal year. The current yield on the stock is 2.9%.

Investors will be encouraged to learn that in late March Barclays initiated coverage of TRNO with an “overweight” rating.

FR focuses its investment efforts on logistics properties, meaning trucking terminals, distribution centers and warehouses. It purchases, builds and manages industrial property across the entire continental U.S. The company’s main criteria in investment selection are quality and location.

In response to the COVID-19 pandemic, FR implemented a strategy of buying of developing properties in coastal areas that experienced supply chain constraints during the crisis. In other words, the company is doing business where it’s most needed.

FR has a market cap around $6.9 billion. 2024 revenue estimates range from $643 million to $694 million, with the Wall Street consensus coming in at $670 million. In 2023 the company paid $1.28 in dividends. The 2024 annualized dividend works out to be $1.48. That represents a healthy 15.6% year-over-year increase.

Based on the current stock price, FR is yielding 2.9%.

To say PLYM had a good first quarter is a bit of an understatement. In a report released on April 2, the company announced that it signed new leases on a total of 1,387,977 square feet of industrial space during the three months ending March 31. According to the firm, this will lead to an immediate 17.1% increase in rental rates on a cash basis.

PLYM is involved in all aspects of the industrial real estate industry, including acquisition, development, leasing and full-service property management. The company is vertically integrated, which means it handles virtually all aspects of its business in-house, resulting in a streamlined, efficient operation.

With a market cap of $986 million, PLYM is a small-cap company that may be a little more volatile than some of its larger counterparts. The annualized dividend is 96 cents a share, which equates to a 4.3% yield based on its recent stock price.

Wall Street is looking for $206 million in revenue from PLYM for 2024. Earlier in the year, JPM Securities demonstrated its faith in the stock by upgrading it from “market perform” to “market outperform.”

PLD is a recognized leader in the industrial REIT category. The company is huge with a market cap of $116 billion, and is expected to produce $7.7 billion in revenue in 2024 and more than $8.4 billion in 2025. If the company can achieve those lofty numbers, it will mean a 9.4% year-over-year revenue growth rate – an impressive feat for a large-cap REIT.

PLD owns and operates modernized logistical facilities in the U.S. and 18 other developed countries. The company utilizes advanced computer systems and cutting-edge robotics in most of the more than 5,600 buildings it owns, and it’s constantly upgrading its technology to stay on top of industry trends. The best-in-class tech is why PLD can demand and receive above-market rental rates from its tenants.

The stock is currently paying an annualized dividend of $3.84 per share. That equates to a current yield of 3.1%. Barclay’s, RBC Capital and Morgan Stanley all have an “outperform” rating on PLD, and Raymond James rates the stock “strong buy.”

Austin, Texas-based EGP is an industrial REIT focusing its investment activity on America’s Sunbelt. It primarily operates in Florida, Texas and North Carolina, but also boasts significant holdings in Arizona and California.

The company strives to be a leading provider of modern, top-quality distribution centers that are both functional and flexible. It looks for location-sensitive tenants who need to be near highways, railroads and shipping terminals. The company’s ideal tenant is one who needs between 20,000 and 100,000 square feet of space.

EGP has a market cap of $8.4 billion, making it a solid mid-cap company. Analysts expect about $630 million in revenue in fiscal 2024, followed by 10% top-line growth to $693 million in 2025.

In September of 2023, EGP increased its quarterly dividend 1.6% from $1.25 to $1.27, giving the stock an annualized dividend of $5.08 and a current yield of 2.9%.

In its most recent earnings report released on Feb. 13, STAG reported that it owned 569 industrial buildings in 41 U.S. states representing more than 112 million square feet of rentable space. Because of the company’s aggressive growth strategy, investors can expect all of those numbers to go up when it reports again on April 29.

Although STAG is dedicated to expansion, the company remains very picky about the location of properties it buys. STAG looks for locations that have a strong, growing and diversified economy, a high demand for commercial real estate and a well-developed strategic infrastructure.

STAG can boast of a market cap of more than $6.8 billion and estimated revenues of $752 million for 2024 and $789 million for 2025. Those revenue numbers, if achieved, would equate to a 5% revenue growth rate, which is not bad for a well-established mid-cap stock.

The stock’s 4% current yield compares favorably to other REITs of its size in the industrial real estate category.

By most measures, Southern California is the single-largest industrial market in the U.S. and the fourth-largest in the world. It also has the highest and fastest-growing industrial real estate demand with the lowest relative supply of any major American market. For these reasons, Los Angeles-based REXR is well situated for continued income generation and superior capital appreciation.

The company’s strategy is to buy industrial real estate in population centers in Southern California, rehab and modernize the properties, and then operate them on a long-term basis. Based on an investor’s presentation the company published in February 2024, REXR owns 673 buildings with more than 46 million rentable square feet of space and is having no problem keeping those facilities occupied.

The company’s customers are mostly general warehousing and transportation clients, like big-box retailers and freight companies, wholesalers and industrial suppliers, such as automotive parts supply outlets and mid- to large-sized manufacturers of consumer and industrial products.

REXR has a market cap of $10.5 billion. It’s estimated that the firm will have $881 million in revenue in 2024 and $1.04 billion in 2025, meaning analysts expect 18% growth in 2025.

REXR shareholders can look forward to an annualized dividend of $1.67 in 2024, which gives the REIT a current yield of 3.4%.