3 REITs to buy for passive income in 2023

About 25% of my Stocks and Shares ISA is taken up with Real Estate Investment Trusts. That’s a pretty big part, but I think the REIT I own would be good as an investment.

Today, there are three radars that I can buy or buy more for passive income in 2023 and beyond. They are a solid and stable business that I think will continue to produce good results.

REITs

I think that 2023 could be a good year for REITs. But I think some have better prospects than others.

Data centers, for example, use a lot of energy and contain a lot of equipment. That makes him expensive, which I think could be a problem in 2023.

I also stayed away from the warehouse building, since the news Amazon looking to rent out some of the excess space. That gives me concern about oversupply.

However, I am looking for a specific REIT that I think can generate stable and reliable rental income. And there are three that are on my agenda right now.

Each focuses on properties in the US. And each property is rented on a triple net basis.

This means that the cost of operating and maintaining the building is borne by the tenant. Landlords only collect rent.

In my view, this is what makes a business worth owning at any time. But this is especially true in a recession, when consistent cash flow is especially valuable.

Federal Realty

Top of the list of REITs to buy is Federal Realty Investment Trust. The company’s portfolio is made up of retail properties.

The biggest risk with retail-focused REITs is the rise of e-commerce. More online shopping may weigh on demand for retail space.

In my opinion, Federal Realty is vulnerable to this but has better protection against threats than its competitors. The property is located in a solid location.

This means that companies looking to reduce their retail footprint tend to close other stores first. That’s why I think a 4% dividend yield looks good for years to come.

Four Corners

I see it too Four Corners Property Trust. The company owns and leases restaurant buildings.

The company’s tenant base is somewhat concentrated, with 54% of the portfolio occupied Darden Restaurant. That concentration presents a risk.

Four Corners has a diverse tenant base, though. And the 5% dividend is supported by occupancy metrics and rental collections.

Occupancy rates consistently exceed 99% and rental collection metrics are also high. So, I can be a reliable source of passive income in 2023.

Realty Income

The last one on my list is Realty Income. Unlike the other REITs on my list, the company pays a monthly dividend.

Realty Income is another REIT focused on retail. It tries to protect itself from the threat of e-commerce by focusing on the quality of tenants in the sector immune from interference.

This has proven successful in the past. The company maintains some of the highest occupancy and rental collection statistics in the industry.

With a company the size of Realty Income, there is a danger that it will be difficult to grow the portfolio during a recession. But with a 5% dividend, I think the risk is priced into the stock.