3 Reasons to Buy Agree Realty Stock Like There's No Tomorrow

In today's volatile market, finding a reliable investment opportunity can be challenging. However, one company stands out as a solid choice for long-term growth and income: Agree Realty (ADC). With a strong focus on net lease retail properties and a proven track record of dividend growth, Agree Realty offers investors three compelling reasons to buy its stock.

1. Attractive Dividend Yield

Agree Realty's dividend yield is one of the most attractive features of the stock. Currently, the yield stands at approximately 4.9%, which is higher than the S&P 500's yield of 4.3% and the average REIT yield of 4.2%. This high yield is not only enticing for income-oriented investors but also indicates that the stock is relatively undervalued, as higher interest rates make it more expensive for REITs to finance their operations.

Moreover, Agree Realty's dividend yield is towards the high end of its historical range, suggesting that the stock is currently on sale. While higher interest rates may pose a temporary headwind, property markets have always adjusted to rate changes, and Agree Realty is well-positioned to navigate this environment.

2. A Different Company Today

Agree Realty's dividend cut in 2011 may raise concerns for some investors. However, it is essential to understand that the company has significantly transformed since then. In 2011, Agree Realty owned less than 100 properties and faced financial challenges due to a key tenant's bankruptcy. Today, the company owns over 2,100 properties, with no single tenant accounting for more than 6% of rents. The majority of its tenants are investment-grade-rated or large retailers, providing a solid foundation for the dividend.

Since resuming dividend growth in 2013, Agree Realty has increased its dividend annually. This consistent growth demonstrates the company's financial strength and commitment to rewarding shareholders.

3. Room to Grow

Agree Realty's focus on net lease retail properties provides ample opportunities for growth. With over 2,100 properties, the company is still a small player in the net lease sector compared to industry giants like Realty Income. Net lease properties are liquid and easy to buy and sell, allowing Agree Realty to quickly acquire new assets and tenants.

Despite higher interest rates, Agree Realty acquired 31 properties in the first quarter of 2024, demonstrating its ability to adapt and grow in challenging market conditions. The company's focus on net lease retail properties enables it to cherry-pick assets and expand its portfolio, ensuring continued dividend growth and shareholder value.

In conclusion, Agree Realty offers investors three compelling reasons to buy its stock: an attractive dividend yield, a transformed company with a solid foundation, and ample room for growth. With a focus on net lease retail properties and a proven track record of dividend growth, Agree Realty is an excellent choice for long-term investors seeking income and capital appreciation.