3 Amazing Ways To Earn Passive Income

An easy way to do this is by investing in companies that pay an annual or quarterly dividend. Not only will your money earn you a predictable and regular cash payout, but your investment should grow at an inflation busting rate as well.

 

One of the most popular dividend paying businesses is known as a real estate investment trust, or REIT. REITs are a special kind of company that are obligated by law to return at least 90 percent of their profits to shareholders.

 

REITs accumulate funds by selling shares in their company, then reinvest that money into many different kinds of property-related assets. These can include apartment complexes, hotels and data centers, or more unlikely locations such as cell towers, woodland – and even cannabis farms.

 

Investing in REITs is a great way to ensure reliable passive income, even if the opportunities for share price appreciation aren’t always that great. So, with this strategy in mind, let’s look at three quality REITs you can invest in today.

 

While many REITs choose to operate in obscure and exotic niche leasing sectors, Camden Property Trust keeps things simple with a focus on the multifamily residence space.

 

The business, which recently upped its quarterly dividend rate by 13.3 percent, owns 170 apartment communities mainly centered around the American Sunbelt states.

 

Indeed, 2021 was a very good year for CPT. The company’s stock price grew a whooping 28 percent, while its core business performed exceptionally well too.

 

The firm finished construction on three additional communities, and stabilized another three at a cost of $290 million. Camden witnessed strong demand for its properties last year, and expects that demand to remain in place throughout 2022 as well.

The company is also in a good financial position going into the new year too. Its revenues were up 11.1 percent for the First Quarter 2022, with its FFO growing 21 percent to $1.50.

 

Camden’s new lease and renewal rates were up an average 14.4 percent this quarter – compared to just 1.0 percent for the same period last year – while its occupancy turnover stood at 96.9 percent.

 

Fortunately for CPT, much of its portfolio is concentrated in regions and cities that are experiencing the fastest rent growth in the United States today. In fact, according to Apartment List’s National Rent Report, locations such as Miami, Orlando, and Tucson – all places where Camden has extensive property holdings – are expanding at rates of 8, 6, and 5 percent respectively.

 

And if this keeps up, 2022 could be another bumper year for the high-flying REIT.

 

 

Prologis is a San Francisco-based REIT that invests in – and builds – its own warehouses. The company is huge, with a current market cap of $121 billion, and has been a big favorite for income investors for many years now.

 

One of the key catalysts to have buoyed PLD’s fortunes recently has been the ongoing global supply chain breakdown. While this has obviously been bad news for the companies and businesses affected, it’s been music to the ears for Prologis’ shareholders.

 

Indeed, as businesses around the world expand their inventories in response to the supply chain crisis, the demand for warehousing space shoots up. As the largest industrial REIT of its kind, it’s only natural that Prologis would benefit most from the salutary effects of this tailwind.

With the exception of Africa and Australia, the company has operations in pretty much every other continent. In fact, so large is its footprint, that Prologis now manages over 1 billion square feet of assets. Furthermore, its activities across 19 countries touches upon 15 percent of all the goods consumed in the world.

 

While it’s good news for investors seeking capital appreciation that Prologis is firing on all cylinders right now, it’s not so good for those looking to buy the stock for income purposes. Prologis has grown its share price nearly 32 percent the last twelve months, with the consequence that its yield has been thoroughly decimated from its historic highs.

 

But that’s not so much of a problem: Prologis is such a powerhouse of a firm that its current forward yield of 2.07 percent is still rather attractive – and not least because its FFO has grown 10 percent for the last five years as well.

 

As the only REIT on our list that hasn’t appreciated in share price over the last year, you might be forgiven for thinking that Alexandria Real Estate Equities offers the best valuation proposition for prospective buyers right now.

 

Indeed, at a multiple of 21.51, ARE has the lowest P/FFO of all three, and, with a yield of 2.55 percent, it’s also returning the biggest fraction of its stock price to investors too.

 

The company specializes in the high-end office and laboratory space, with properties in major centers of learning such as the San Francisco Bay area, Boston, suburban Washington, D.C. and North Carolina’s Research Triangle.

 

The business also has its own venture capital arm, Alexandria Venture Investments, with investments in many of the biotech start-ups that actually use its properties as a base.

Alexandria will celebrate its 25th anniversary as a publicly-traded company this year. In that time, the firm has outperformed many major stock market indices, as well as some of Wall Street’s most famous investors.

 

In fact, as its founder and now Executive Chairman, Joel Marcus, is keen to point out, the REIT has beaten the returns of the NASDAQ average, the S&P 500, the FTSE NAREIT Office Index and Warren Buffett’s Berkshire Hathaway over the previous quarter century.

 

The company’s growth prospects aren’t too shabby either. Alexandria expects its FFO to grow 8 percent in 2022, building on the strong leasing activity that the company saw in 2021.

 

In fact, the firm enjoyed its second highest leasing volume in the First Quarter 2022, and believes it can generate in excess of $665 million incremental yearly rental revenue over the next six reporting periods too.