HomeMost PopularThe Advantages of Investing in Agree Realty: High Potential Upside at a...

The Advantages of Investing in Agree Realty: High Potential Upside at a Low Valuation

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Reit inscription on a wooden block. Real estate investment trust concept. Company that owns, operates, or finances income-generating real estate. Magnifying glass

Dear subscribers,

Within my REIT portfolio, two of my largest positions are in two monthly-paying companies that I consider to be attractively priced. Both companies have investment-grade ratings and offer yields over 4%, making them appealing even in comparison to risk-free investments like CDs.

One of these companies is Agree Realty (NYSE:ADC). While it may be considered a smaller sibling to Realty Income (O), it offers similar advantages without some of the associated risks, scale, and international diversification.

In this article, I will explain why Agree Realty is an exceptional investment opportunity and why a significant percentage of my portfolio is allocated to this company.

Agree Realty – Consistent Monthly Income

As an investor, I actively seek out companies that provide monthly dividends, as I have found that these well-managed companies tend to outperform the market. Agree Realty aligns with this trend.

The company has an impressive track record, delivering a 5-year total stock return (TSR) of 73.8%, outperforming the market. Since its IPO in 1994, Agree Realty has achieved an annualized rate of return (RoR) of 12.3% and consistently increased its dividend by 6.1% over the past decade.

Agree Realty offers numerous appealing features, including investment-grade ratings, a monthly dividend payout, and a diverse portfolio without excessive exposure to cyclical industries. With over 1,900 properties and a solid tenant base, including national industry leaders and prominent brands, Agree Realty demonstrates a strong foundation for continued success.

The company’s financials are impressive, with low net debt to recurring EBITDA, a robust operating portfolio, and over 65% of tenants rated as investment-grade. Agree Realty also has a high level of clarity and transparency, as analysts have consistently provided accurate and positive forecasts.

Despite more modest growth expectations in the current REIT space, Agree Realty remains a valuable long-term and conservative investment option. The company’s focus on e-commerce-resistant clients, recession-resistant operations, and its strategic approach to acquisitions and disposals further contribute to its attractiveness as an investment.

While investing in Agree Realty may not make you instantly wealthy, it provides the opportunity for capital appreciation and a reliable stream of income. With a favorable valuation and the potential for a 15%+ annual upside, Agree Realty is a compelling choice for investors seeking stable, cash-generating assets.

Investment Thesis

  • Agree Realty offers high-quality, risk-free dividends and significant potential for capital appreciation.
  • The company represents a substantial portion of my conservative investment portfolio.
  • Analysts project a price target of at least $75/share, suggesting a minimum 10% upside.

I firmly believe Agree Realty is a β€œBUY” due to its overall quality, conservative management, well-covered dividend, and its current attractive valuation. It satisfies all of my investment criteria, making it an excellent addition to any portfolio.

Remember, my investment approach focuses on buying undervalued companies, capturing capital gains and dividends, and reallocating funds when necessary. Agree Realty aligns with this strategy and serves as a reliable cash-generating asset.

I highly recommend considering Agree Realty as part of your investment portfolio, offering a monthly β€œcash printer” and the potential for long-term growth.

Source: Seekingalpha.com

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