11 High-Yield REITs to Buy for Big Income

Thus, these types of investment vehicles may be better hedges against inflation than other types of investments. STAG primarily leases its buildings to single tenants in a large number of markets. As a result, it doesn’t have to contend with the constant turnover that multi-tenant properties like shopping centers and office parks often experience. book on option chain analysis And it achieves a healthier diversification than companies focused on a few primary markets Its weighted average lease length is about 4.7 years. In July 2023, Realty Income paid a monthly dividend of $0.2555 per share (for an annual dividend per share of $3.06). Realty Income has declared 637 consecutive dividends over 54 years.

So while investors shouldn’t expect Realty Income to hit $3.1 billion every quarter, some big quarters should be expected and are, very likely, necessary for the REIT to hit its yearly targets. The problem with Realty Income’s size is that it actually needs to do very large deals if it wants to keep growing. If you add $100 to $100,000 you’ve only increased the sum by 0.1%. As a company gets bigger it takes more to meaningfully expand the business.

And many firms will link rent increases with the Consumer Price Index (CPI), making REITs ideal investments during times of higher inflation. The past year has been a tough one for real estate investment trusts (REITs), but notable declines now could set the stage for some of the best REITs to rally down the road. Not unlike almost every other company on this list, UDR is trading for less than it was in February (when the market crashed). As a result, UDR is trading for a discount and currently represents a nice value. Investors who get in now may be able to ride a wave of growth, which will simultaneously increase the attractive dividend yield.

With a market capitalization of $7.19 billion, this is an excellent selection for investors seeking a balance of income and growth. In this article, we’ll discuss some of the best high yield REITs that generate lucrative dividends as well as great returns for investors. REITs own portfolios of income-producing real estate, and non-traded or publicly held, they all carry the obligation to pay out at least 90% of their taxable income to their shareholders. Blackstone is different from most mREITs in that it doesn’t own mortgages and mortgage derivatives on single-family homes. Instead, Blackstone focuses on the less standardized (and more lucrative) world of commercial property financing. This matters because commercial loans, unlike home mortgages, tend to be based on floating rates – so Blackstone lacks the interest-rate risk faced by most typical mortgage REITs.

The Games Workshop dividend strikes again! Buying time?

It’s rare to find a company with finances solid enough to provide consistent annual dividend increases to their investors. The company invests in retirement communities, specialty hospitals, medical office buildings, and skilled nursing facilities. Some of VEREIT’s properties, by and large, look a lot like those of Realty Income or National Retail Properties. You see a lot of pharmacies, convenience stores and other high-traffic retail properties among the REITs biggest renters. VEREIT is very diversified by property type, in fact, with 41% retail, 23% restaurants, 20% office and 16% industrial.

In fact, for the full year of 2023, the company is targeting acquisitions volume of roughly $7 billion. Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Following a 30% decline over the last year, PRS shares now come with a 5.5% dividend. To me, that looks like a buying opportunity, so I’m looking to add the stock to my portfolio this week.

The REIT signaled its confidence in September by reactivating its $300 million share repurchase program and hiking its dividend by 1.6%. One reason this REIT is great for retirees is its fortress-like balance sheet. NHI has very low leverage (4.8 times ratio of debt-to-adjusted EBITDA), $785 million of liquidity and no significant debt maturities before 2022. With over $1.9 billion of liquidity, WP Carey will be able to step up investments in new properties, which should fuel 2021 AFFO growth. As noted above, REITs can be heavily leveraged, so a balance sheet review is necessary.

Best REIT ETFs

Realty income from these properties is more predictable and reliable, essentially guaranteeing good realty income. Net leases pass the majority of the property-specific expenses onto the tenants, which become contractual obligations. Using single occupancy buildings offer more versatility and are safer investments than multi-business buildings such as malls. Above all, the REIT offers a high dividend yield of 5.36% to shareholders. In addition to growth potential, it has a dividend yield of 3.27%.

• Extra Space is smaller than Public Storage, with a market cap of $11 billion vs. Public Storage’s $36.6 billion.
• You pay ordinary income taxes on REIT dividends—most other stock dividends are taxed at a lower, preferential rate.
• As an investor, you routinely make trade-offs between risk and reward.
• This is another name worth paying up for if you value dividend consistency over a high yield.
• Duke Realty stock has handily beaten the S&P 500 in total return for years and is now yielding about 1.88% at a share price of approximately $58.65.
• The strength of its markets and tenants is evidenced by third-quarter rent collections remaining strong at 99.7%.

Review the REIT’s tenant profile, average lease length and occupancy trends. Also read through annual reports and other documentation to understand the REIT’s growth and acquisition strategy. New borrowings can fund property acquisitions, which increases profits, cash flow and dividends.

Basically, it is positioned extremely well for the growth in demand for warehouses, thanks to the increased use of online shopping. REITs that boast having all three of these characteristics will be much safer than rivals lacking one or more of these traits. Because of that, they should pay a secure dividend yield while also offering consistent dividend growth.

Physicians Realty Trust

Also, their shares are traded on exchanges, giving them liquidity plus the potential for growth as well as income. Rounding out this trio is Prologis (PLD 1.83%), the largest name in the warehouse space. Like the other two, this REIT historically trades at a premium price. Notably, https://1investing.in/ this $90 billion market cap company’s yield is a tiny 2% or so. That’s historically low, but like Realty Income and AvalonBay, that means access to cheap growth capital for this investment-grade-rated REIT. The 25-year-old REIT currently has 164 farms — all leased — in 15 states.

Qualifying REITs are permitted to deduct all of the dividends they pay out each year from their corporate taxable income. As their names suggest, REITs are businesses which own, finance, or operate income-producing real estate assets. In other words, REITs are in the business of making money off of real estate. However, it is worth noting that how REITs make money off of real estate assets can vary from company to company. The $0.16 annual dividend yields 6.2% and has a 20.77% payout ratio. The P/FFO is a meager 3.8, so this REIT is certainly undervalued and not likely to have its dividend cut, despite about $400 million in 2024 debt maturities.

Vanguard Real Estate ETF

Medical Properties Trust, Iron Mountain, and VICI Properties all have well-covered payout ratios and are expected to increase revenue in the coming years. These three high-dividend REITs should provide long-term income and price growth for investors. “LTC” is short for “long-term care” – fitting, as 86% of the portfolio is invested in skilled nursing and assisted living properties, with the remainder invested in mortgages and notes.

At present, its properties are 99.6% leased and have remaining lease terms averaging a high 14.6 years. In addition, the company boasts a $1.2 billion development pipeline that is already 63% pre-leased. MPW has delivered 30% annual asset growth and 8% annual FFO per share gains over the past decade. That has helped a short string of seven consecutive years of dividend increases, with growth averaging a modest 4% annually. The REIT’s core FFO per share fell by just 4% during the first nine months of 2020, and the company maintained a 98.4% occupancy rate. A solid balance sheet showing $294.9 million of cash, the full amount available on a $900 million line of credit and no debt maturities before 2023 gives NNN great financial flexibility.

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And while that might seem ridiculously wasteful and unnecessary, millions of Americans do it. There are more self-storage facilities in America than there are McDonald’s (MCD) and Starbucks (SBUX) locations combined. One potential risk is a high concentration to a questionable restaurant tenant, Red Lobster. The perennially struggling seafood chain accounts for about 7% of the portfolio. That figure still isn’t high enough to put the whole portfolio in serious danger, but all the same, be glad that management is looking to divest it further. The sooner VEREIT fully eliminates the reckless legacy of its predecessor REIT, the sooner it will trade at a valuation more in line with its peers.

Basically, at best, it is fully priced and, perhaps, even a bit expensive. The thing is, this conservatively managed industry bellwether is a reliable giant. So, it is probably worth a premium price for more conservative types. And, oddly enough, selling stock is a key source of capital for Realty Income, so a premium price is, counterintuitively, conducive to growth.

Based on expected 2021 FFO per share of $1.55, FCPT trades for a P/FFO of 17.8. And 60% of them are linked to the consumer price index (CPI), which is a nice hedge for those of us concerned about inflation. In a market where liquidity is drying up fast, sign me up for safe dividends plus additional profits. The asset price “fuel” that our Federal Reserve has provided since March 2020 is disappearing. Fed Chairman Jay Powell is being forced by inflation numbers to reduce the massive cash the Fed has been providing the financial markets. Essential Properties began paying dividends in 2019, a year after came public, and hiked those payouts twice that year for a total increase of nearly 10%, but has kept dividends level in 2020.

As a result, the ETF offers broad exposure to the entire REIT sector, with a focus on the largest REITs that dominate the industry. According to Forbes, real estate was the primary wealth-creating vehicle for 215 of the world’s 2,755 billionaires. Meanwhile, it has helped countless millionaires amass and enhance their wealth. On Aug. 14, Generation Income reported second-quarter FFO of negative $0.03, in line with expectations. Revenue of $1.33 million missed the estimates of $1.32 million and was down 5% from the second quarter of 2022. On Sept. 12, KeyBanc Capital Markets initiated coverage on Brandywine Realty Trust with an Overweight rating and a price target of $6.

• Since a REIT is composed of a managed pool of assets, assessing the managers’ track record is key to understanding if a REIT is a good buy and if its management team is worth its fees.
• The owner of single-tenant, net-leased retail properties has delivered 33 consecutive dividend increases.
• PLD stock may tick these boxes if one is invested in other more popular REITs such as residential property or commercial buildings.

Dividend yields are calculated by annualizing the most recent quarterly payout and dividing by the share price. Click on ticker-symbol links in each slide for current share prices and more. Publicly traded REITs may have minimum purchases as low as the price of one share. If fractional share investing is available, this minimum may fall to $5 or less, making publicly traded REITs accessible to most any investor. Notably, publicly traded REITs can be bought and sold whenever an exchange is open, making it easy to access the cash value of your investment at almost any time.

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