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When considering putting your money into real estate investment trusts (REITs), the first industries that might come to mind could be residential apartment complexes, medical facilities, or major retail spaces.
One critical, often overlooked investment opportunity is infrastructure REITs. Infrastructure REITs offer a 2.12% average dividend yield, which falls within what industry professionals consider a healthy return range.
REITs specializing in infrastructure finance own and operate data or energy movement and storage centers.
We researched company history, leadership, values, dividend ratios, growth rates and opportunities, stock prices, and risk assessments to present the five best infrastructure REITs to buy in 2023.
Top 5 Best Infrastructure REITs
- CorEnergy Infrastructure Trust – Best infrastructure REIT
- American Tower – Largest infrastructure REIT
- Crown Castle International – Best cell tower REIT
- iShares U.S. Infrastructure ETF – Best infrastructure REIT ETF
- SBA Communications – Best infrastructure REIT stock
CorEnergy Infrastructure Trust (CORR) – Best Infrastructure REIT
As the original public energy infrastructure REIT, CorEnergy focuses on core U.S. infrastructure sectors, such as power, utilities, and oil and gas.
The company prioritizes locking in long-term contracts to establish reliable income. It performs exhaustive client vetting that considers cash flow security, growth strategy and present and future value.
The REIT’s leadership comprises professionals with backgrounds in energy asset and utility operation, infrastructure architecture, private and public equity and fund management.
- Types of investments: CorEnergy, trading as CORR on the New York Stock Exchange (NYSE), invests in facilities that produce, develop, transfer and hold energy resources, such as electric power distribution centers, pipelines and storage tanks.
- Markets: CorEnergy invests in the Missouri, Illinois and California markets.
- Dividend yield: 8.81%
Why we recommend it: CorEnergy’s close client examination guarantees secure and profitable contracts on its assets.
It invests in diverse resource channels, including upstream, midstream and downstream assets. Plus, it provides high-yield dividends.
American Tower (AMT) – Largest Infrastructure REIT
American Tower, trading as AMT on the stock market, is a cell tower REIT with a global portfolio that centralizes on telecom assets. This REIT has a reputation for being employee-focused and supportive of professional development.
It also participates in large-scale sustainability initiatives that evaluate sites for emission-reducing compatibility and protect the land and animals present, such as migratory birds that nest on the towers.
- Types of investments: American Tower invests in edge and metro data centers — corporate facilities that house and connect various network and data operations.
- Markets: American Tower is a global infrastructure REIT in North America, Europe, Asia, Africa and South America.
- Dividend yield: 2.72%
Why we recommend it: American Tower’s sheer scale and international market range make this infrastructure REIT a considerably safe investment.
This company holds assets that are vital to the digital economy. It is also a real estate company that aggressively prioritizes environmental protection.
Crown Castle International (CCI) – Best Cell Tower REIT
Crown Castle International, trading as CCI on the NYSE, is another communications infrastructure REIT. This real estate company maintains a laser focus on supporting the sustainability of telecom framework and scaling networks.
It has long-standing contracts with state and federal government agencies and clients in such industries as healthcare, education, public safety and utilities.
- Types of investments: Crown Castle International invests in wireless and fiber solutions that include small cell antennas, cell towers, private networks, video transport and much more.
- Markets: Crown Castle International holds assets throughout the U.S.
- Dividend yield: 4.33%
Why we recommend it: CCI has over 25 years of investment success in U.S. telecom with income-producing contracts that translate to steady returns.
iShares U.S. Infrastructure ETF (IFRA) – Best Infrastructure REIT ETF
iShares is industry-leading in exchange-traded funds, which are pooled investment securities that work similarly to a mutual fund.
The company maintains wide asset class diversification, including commercial real estate for U.S. infrastructure.
- Types of investments: iShares US Infrastructure ETF, which trades as IFRA on Wall Street, invests in domestic utilities, railroads and infrastructure construction companies.
- Markets: this particular iShares sector holds infrastructure realty assets across the U.S.
- Dividend yield: 1.92%
Why we recommend it: This fund has Blackrock sponsorship, and its shares carry low volatility. It also aims to meet the performance standards of the NYSE Factset U.S. Infrastructure Index.
SBA Communications (SBAC) – Best Infrastructure REIT Stock
SBA Communications focuses on investing in wireless communication infrastructure for international and domestic wireless service providers.
It provides services in leasing small cell sites and developing sites, for example, by aiding in site obtainment, zoning, building and equipment installation.
- Types of investments: Trading as SBAC on the NYSE, SBA Communications invests in in-building network solutions for commercial offices, rooftop and building development to transition into network utilization, and new cell tower construction.
- Markets: SBA Communications invests in the North American, South American, African, Asian and Central American markets.
- Dividend yield: 0.98%
Why we recommend it: Developing new and existing sites for scaling wireless networks domestically and internationally is critical to the digital economy.
This infrastructure REIT takes a meticulous approach to its investments that reflects in the stock.
What Are Infrastructure REITs?
Infrastructure REITs invest in infrastructure property types conducive to long-term commercial leases.
Technology firms, oil and gas companies, wireless service providers, government agencies and more contribute to profits from this booming investment sector.
Common infrastructure equity investments include:
- Cell towers
- Fiber cables
- Data centers
- Energy pipelines
- Wireless infrastructure
Other forms of REITs acquire commercial properties in such industries as retail, healthcare, residential rentals, and hospitality.
Infrastructure REITs focus on funding or owning data centers and energy storage and transmission sites. They lease out under long-term contracts to various wireless service providers, utility companies, government agencies and more.
Each infrastructure REIT specializes in different property types, including cell towers, wireless infrastructure, fiber cables and energy pipelines in domestic and international markets.
Benefits of Infrastructure REITs
Buying stocks in this sector offers a variety of investor advantages.
Portfolio diversification – Having infrastructure REITs in your investment portfolio lowers the volatility by diversifying into a sector that marries real estate and infrastructure stock benefits.
Global demand – With constant technological developments across all industries, the need for data centers and wireless networks is international and constantly growing.
Long-term leases – Clients typically enter into long-term contracts with data and energy facilities, securing income-producing leases for extended periods.
Recession resistant – Energy demand is constantly climbing, no matter the economy’s state. Infrastructure REITs also have a history of being named critical vendors in tenant bankruptcy, protecting lease payments.
High dividend yields – REITs offer high dividend yields because of the regulatory requirements they must abide by, such as paying out a 90% minimum of net income to shareholders.
Risks of Investing in Infrastructure REITs
For all the benefits of this type of investment, there are also risks.
Large amounts of debt – The REIT industry carries a large long-term debt amount, and infrastructure REIT lenders put forth a lot of capital to acquire and develop sites.
High-interest rate risk – Infrastructure REIT demand lessens during high-interest rate periods.
Tenant bankruptcies – Sometimes, a tenant declares bankruptcy that does not list the REIT as a critical vendor, which means that payments are not met.
How to Invest in Infrastructure REITs
First, meet with a brokerage to help you clarify your financial goals and identify infrastructure REIT stocks in alignment with those goals.
Second, consider such factors as the REIT’s property types, tenant and sponsor profiles and financial performance before purchasing shares.
Third, open a broker account and begin investing.
Infrastructure real estate is a vital component of the digital economy. Infrastructure REITs play a critical role in financing, owning and operating the energy and data facilities that today’s world requires.
You can choose the best infrastructure REIT to invest in by examining this research surrounding each real estate company’s core values, dividends, property types and markets.
Consider the pros and cons of this investment sector and meet with a financial advisor to strategize a plan of action for your infrastructure REIT investment path.
Infrastructure REIT FAQs
Are infrastructure REITs a good investment?
Yes, investing in infrastructure REITs allows you to diversify your portfolio by owning stock in industries with international, recession-resistant demand.
Infrastructure REIT stocks offer long-term, recession-proof, high-yield returns.
What is the largest infrastructure company?
Union Pacific Corporation, a railroad holding company, is the largest infrastructure company. American Tower is the largest infrastructure REIT.
What is the difference between an infrastructure REIT and an infrastructure company?
An infrastructure REIT leases facilities, whereas an infrastructure company directly operates and manages the equipment.