Stifel analyst names top picks in triple-net REIT sector

Investing.com - Stifel has identified its top picks in the triple-net REIT sector, which has outperformed the broader REIT market year-to-date, according to a note published by the firm. Among these picks, Agree Realty Corporation (ADC) stands out with its impressive 32-year track record of maintaining dividend payments and a current yield of 4.27%, according to InvestingPro data.

The triple-net sector has gained 10.1% year-to-date through August 15, compared to the broader REIT space (RMS) which declined 0.2%, following underperformance in 2024 when the sector rose 2.0% versus the RMS gain of 8.8%.

Stifel highlighted that despite volatility in inflation data, macroeconomic uncertainty has kept 10-year Treasury yields in the 4.25%-4.5% range, with the yield closing at 4.34% after reaching a mid-January high of 4.80%.

The firm noted that acquisition yields have remained stable while most companies’ costs of capital justify external growth, resulting in improved guidance ranges throughout the year, with 2025 AFFO growth projections rising to 3.0% from 2.5% in March.

Stifel’s top picks in the sector include (NYSE:ADC) at $71.96, (NYSE:EPRT) at $30.25, (NYSE:NTST) at $18.57, and (NYSE:PSTL) at $14.67, all with Buy ratings, while noting the sector’s valuation remains attractive at 77% of the broader REIT universe’s next-year AFFO multiple compared to its 10-year average of 84%.

In other recent news, Agree Realty Corporation reported its second-quarter 2025 financial results, showing a slight miss on earnings per share (EPS) but a revenue figure that exceeded expectations. The company’s EPS was $0.43, falling short of the anticipated $0.45, while revenue reached $175.53 million, surpassing the forecasted $173.17 million. Additionally, Agree Realty has appointed Kirk Klatt as Vice President of Leasing, bringing over 20 years of experience in real estate to the role. In terms of analyst activity, Jefferies raised its price target for Agree Realty to $90, citing the company’s strong balance sheet and growth strategy. UBS also increased its price target to $82, following Agree Realty’s decision to raise its 2025 AFFO guidance midpoint and acquisition midpoint. These developments highlight Agree Realty’s strategic positioning and operational adjustments in the current market landscape.

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