3 Top REIT Stocks to Buy in December

Rising interest rates have depressed the prices of income-oriented investments like real estate investment trusts (REITs). That has created an opportunity to trade up to the industry's bellwether names. But that's not the only opportunity that's been created, as the stocks of less well known REITs have also fallen on hard times. If you're willing to dig a little deeper, now is a good time to consider (NYSE: UDR), Stag Industrial (NYSE: STAG), and Agree Realty (NYSE: ADC).

The bellwether name in the apartment REIT niche is Avalonbay (NYSE: AVB). If you're looking at it because of the broader REIT decline, you might want to consider UDR instead. While Avalonbay focuses on large metropolitan areas of the country, UDR takes a more diversified approach. Roughly 30% of its portfolio is located in urban markets, with the rest in suburban areas. Around 39% of rents come from the East Coast, 35% from the West Coast, and 26% from the U.S. Sunbelt. And roughly 45% of rents are from class A apartments (an industy qualification system that typically means a newer building in prime locations with lots of ammenities), with the rest from class B assets (fewer ammenities, older) that can be redeveloped into higher-quality properties. It's probably one of the most diversified apartment REITs you can own.

One of the larger apartment REITs, with roughly 60,000 units, it also has a fairly impressive dividend record, with 14 consecutive years of annual dividend increases. UDR has been fairly up front about the issues it face today, recently warning investors that the next year or so will be difficult because new apartment construction will depress pricing strength. That's really just a normal industry cycle. With a yield of 4.8%, compared to AvalonBay's 3.7%, more aggressive investors should probably do a deep dive.

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Source Fool.com