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GOOGL   145.91 (+0.25%)
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NVDA   696.41 (-0.65%)
NIO   5.82 (-0.68%)
AMD   169.35 (-0.93%)
BABA   70.74 (-3.94%)
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MU   84.88 (-0.34%)
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GE   139.07 (+0.41%)
DIS   110.54 (+11.50%)
AMC   4.09 (+3.81%)
PFE   27.56 (+0.00%)
PYPL   56.13 (-11.24%)
XOM   103.97 (+1.71%)
QQQ   432.79 (+0.19%)
AAPL   188.32 (-0.58%)
MSFT   414.11 (+0.01%)
META   470.00 (+0.09%)
GOOGL   145.91 (+0.25%)
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NVDA   696.41 (-0.65%)
NIO   5.82 (-0.68%)
AMD   169.35 (-0.93%)
BABA   70.74 (-3.94%)
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MU   84.88 (-0.34%)
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QQQ   432.79 (+0.19%)
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High Dividend REITs

Below you will find a list of real estate investment trusts (REITs) that offer dividend yields of 4% or higher that trade on the New York Stock Exchange and the NASDAQ. Please note that the listed annual payout and dividend yield is based on the previous 12 months of dividend payments. If a REIT has cut their dividend in the last 12 months, the indicated annual payout and dividend yield may not represent what the company plans to pay out in dividends moving forward. Learn more about high-yield REITs.

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CompanyCurrent PriceDividend YieldAnnual Payout3-Year Dividend GrowthPayout RatioEx-Dividend DateIndicator(s)
Invesco Mortgage Capital Inc. stock logo
IVR
Invesco Mortgage Capital
$8.40
-0.1%
19.06%$1.60-26.64%39.02%N/A
TPG RE Finance Trust, Inc. stock logo
TRTX
TPG RE Finance Trust
$5.19
-1.3%
18.50%$0.96-2.32%121.52%N/ANews Coverage
Positive News
Medical Properties Trust, Inc. stock logo
MPW
Medical Properties Trust
$3.29
+0.9%
18.26%$0.60-6.60%86.96%N/APositive News
Orchid Island Capital, Inc. stock logo
ORC
Orchid Island Capital
$8.00
+0.1%
18.01%$1.44-23.05%N/AN/A
KKR Real Estate Finance Trust Inc. stock logo
KREF
KKR Real Estate Finance Trust
$9.69
-4.4%
17.75%$1.72N/A104.88%3/27/2024Dividend Cut
Analyst Report
News Coverage
Gap Down
High Trading Volume
Global Net Lease, Inc. stock logo
GNL
Global Net Lease
$8.15
+1.5%
17.43%$1.42-3.56%105.97%N/APositive News
Cherry Hill Mortgage Investment Co. stock logo
CHMI
Cherry Hill Mortgage Investment
$3.48
+0.3%
17.24%$0.60-15.89%65.22%N/A
Ellington Residential Mortgage REIT stock logo
EARN
Ellington Residential Mortgage REIT
$5.70
+2.7%
16.86%$0.96-5.01%88.89%N/ANews Coverage
ARMOUR Residential REIT, Inc. stock logo
ARR
ARMOUR Residential REIT
$18.56
+0.4%
15.52%$2.88-8.37%64.29%2/14/2024Dividend Announcement
News Coverage
AGNC Investment Corp. stock logo
AGNC
AGNC Investment
$9.35
+0.3%
15.40%$1.44-2.63%71.64%N/ADividend Announcement
Granite Point Mortgage Trust Inc. stock logo
GPMT
Granite Point Mortgage Trust
$5.20
+0.4%
15.40%$0.8025.99%111.11%N/AUpcoming Earnings
News Coverage
Positive News
Ares Commercial Real Estate Co. stock logo
ACRE
Ares Commercial Real Estate
$8.67
-1.3%
15.23%$1.32N/A116.81%N/ANews Coverage
Two Harbors Investment Corp. stock logo
TWO
Two Harbors Investment
$12.29
+1.0%
14.65%$1.801.64%91.84%N/AGap Down
Brandywine Realty Trust stock logo
BDN
Brandywine Realty Trust
$4.12
+1.7%
14.56%$0.60-1.79%N/AN/A
NexPoint Real Estate Finance, Inc. stock logo
NREF
NexPoint Real Estate Finance
$14.04
+0.6%
14.25%$2.0018.56%93.02%N/A
Arbor Realty Trust, Inc. stock logo
ABR
Arbor Realty Trust
$12.12
-1.1%
14.19%$1.7210.95%85.15%N/A
Annaly Capital Management, Inc. stock logo
NLY
Annaly Capital Management
$18.80
+1.2%
13.83%$2.60-10.61%95.94%N/AAnalyst Report
News Coverage
Ready Capital Co. stock logo
RC
Ready Capital
$8.88
+0.6%
13.51%$1.203.94%84.51%N/ANews Coverage
Blackstone Mortgage Trust, Inc. stock logo
BXMT
Blackstone Mortgage Trust
$18.54
+1.0%
13.38%$2.48N/A94.30%N/AUpcoming Earnings
Options Volume
Positive News
Apollo Commercial Real Estate Finance, Inc. stock logo
ARI
Apollo Commercial Real Estate Finance
$10.66
+1.3%
13.14%$1.40-1.16%101.45%N/ANews Coverage
MFA Financial, Inc. stock logo
MFA
MFA Financial
$10.73
+0.6%
13.05%$1.402.50%76.50%N/A
Dynex Capital, Inc. stock logo
DX
Dynex Capital
$12.00
+1.3%
13.00%$1.56-2.05%195.00%N/A
Lument Finance Trust, Inc. stock logo
LFT
Lument Finance Trust
$2.24
-0.4%
12.50%$0.28N/A58.33%N/ANews Coverage
Positive News
Uniti Group Inc. stock logo
UNIT
Uniti Group
$4.86
-2.0%
12.35%$0.60N/A125.00%N/APositive News
BrightSpire Capital, Inc. stock logo
BRSP
BrightSpire Capital
$6.65
-0.2%
12.03%$0.80N/A78.43%N/A
Chicago Atlantic Real Estate Finance, Inc. stock logo
REFI
Chicago Atlantic Real Estate Finance
$15.74
+1.3%
11.94%$1.88N/A79.66%N/APositive News
PennyMac Mortgage Investment Trust stock logo
PMT
PennyMac Mortgage Investment Trust
$13.56
+0.1%
11.80%$1.601.72%112.68%N/AAnalyst Report
Analyst Revision
News Coverage
Franklin BSP Realty Trust, Inc. stock logo
FBRT
Franklin BSP Realty Trust
$12.29
+0.2%
11.55%$1.42N/A80.68%N/AUpcoming Earnings
Positive News
New York Mortgage Trust, Inc. stock logo
NYMT
New York Mortgage Trust
$7.38
+0.4%
10.84%$0.8010.06%97.56%N/APositive News
Service Properties Trust stock logo
SVC
Service Properties Trust
$7.72
+2.8%
10.36%$0.8011.96%N/AN/A
Creative Media & Community Trust Co. stock logo
CMCT
Creative Media & Community Trust Co.
$3.35
-4.0%
10.15%$0.344.26%9.60%N/AGap Down
Starwood Property Trust, Inc. stock logo
STWD
Starwood Property Trust
$19.12
-1.1%
10.04%$1.92N/A91.43%N/APositive News
Rithm Capital Corp. stock logo
RITM
Rithm Capital
$10.13
-0.5%
9.87%$1.0025.99%58.48%N/AEarnings Report
Analyst Revision
News Coverage
Redwood Trust, Inc. stock logo
RWT
Redwood Trust
$6.50
+1.2%
9.85%$0.64-0.69%85.33%N/APositive News
Great Ajax Corp. stock logo
AJX
Great Ajax
$4.50
-6.4%
9.78%$0.4414.22%220.00%N/AAnalyst Report
Positive News
Manhattan Bridge Capital, Inc. stock logo
LOAN
Manhattan Bridge Capital
$4.66
9.66%$0.452.33%N/A4/9/2024Dividend Increase
Chimera Investment Co. stock logo
CIM
Chimera Investment
$4.60
+1.8%
9.57%$0.44-20.63%69.84%N/AUpcoming Earnings
News Coverage
OUTFRONT Media Inc. stock logo
OUT
OUTFRONT Media
$12.85
+1.0%
9.34%$1.2046.71%169.01%N/AAnalyst Revision
Braemar Hotels & Resorts  stock logo
BHR
Braemar Hotels & Resorts
$2.16
9.28%$0.20N/AN/A3/27/2024News Coverage
Negative News
CTO Realty Growth, Inc. stock logo
CTO
CTO Realty Growth
$16.53
+1.0%
9.20%$1.5233.89%N/AN/A
Easterly Government Properties, Inc. stock logo
DEA
Easterly Government Properties
$11.78
+0.9%
9.00%$1.060.64%341.94%N/A
Omega Healthcare Investors, Inc. stock logo
OHI
Omega Healthcare Investors
$29.91
+6.5%
8.96%$2.68N/A184.83%N/AAnalyst Upgrade
News Coverage
Gap Up
High Trading Volume
Sabra Health Care REIT, Inc. stock logo
SBRA
Sabra Health Care REIT
$13.40
+3.5%
8.96%$1.20-3.85%184.62%2/12/2024Dividend Announcement
Positive News
One Liberty Properties, Inc. stock logo
OLP
One Liberty Properties
$20.20
+0.6%
8.91%$1.80N/A400.00%N/APositive News
Global Medical REIT Inc. stock logo
GMRE
Global Medical REIT
$9.55
+1.3%
8.80%$0.841.64%1,200.00%N/A
Presidio Property Trust, Inc. stock logo
SQFT
Presidio Property Trust
$1.03
-1.9%
8.74%$0.09-3.09%N/AN/APositive News
Ladder Capital Corp stock logo
LADR
Ladder Capital
$10.65
+0.6%
8.64%$0.92-0.71%61.33%N/ANews Coverage
City Office REIT, Inc. stock logo
CIO
City Office REIT
$4.73
+2.6%
8.46%$0.40-4.32%N/AN/APositive News
Alexander's, Inc. stock logo
ALX
Alexander's
$216.36
+0.8%
8.32%$18.00N/AN/A2/16/2024Upcoming Earnings
Dividend Announcement
Highwoods Properties, Inc. stock logo
HIW
Highwoods Properties
$24.07
+6.3%
8.31%$2.001.37%370.37%2/16/2024
Orion Office REIT Inc. stock logo
ONL
Orion Office REIT
$4.86
+4.7%
8.23%$0.40N/AN/AN/APositive News
Healthcare Realty Trust Incorporated stock logo
HR
Healthcare Realty Trust
$15.57
-0.3%
7.97%$1.241.10%N/AN/A
EPR Properties stock logo
EPR
EPR Properties
$42.59
-1.0%
7.75%$3.3029.63%123.13%N/APositive News
Modiv Industrial, Inc. stock logo
MDV
Modiv Industrial
$14.85
+0.1%
7.74%$1.15N/A255.56%2/28/2024
Physicians Realty Trust stock logo
DOC
Physicians Realty Trust
$11.89
+0.6%
7.74%$0.92N/A368.00%N/APositive News
Clipper Realty Inc. stock logo
CLPR
Clipper Realty
$4.97
+2.1%
7.65%$0.38N/AN/AN/APositive News
Universal Health Realty Income Trust stock logo
UHT
Universal Health Realty Income Trust
$38.35
+1.8%
7.56%$2.901.43%N/AN/ANews Coverage
Positive News
LTC Properties, Inc. stock logo
LTC
LTC Properties
$30.64
+1.1%
7.44%$2.28N/A125.97%2/20/2024Upcoming Earnings
Alpine Income Property Trust, Inc. stock logo
PINE
Alpine Income Property Trust
$15.22
-0.1%
7.23%$1.1010.29%N/AN/ANews Coverage
Community Healthcare Trust Incorporated stock logo
CHCT
Community Healthcare Trust
$25.41
+1.4%
7.16%$1.822.32%221.95%N/AUpcoming Earnings
Positive News
Broadstone Net Lease, Inc. stock logo
BNL
Broadstone Net Lease
$16.05
+1.1%
7.11%$1.1420.82%144.30%N/APositive News
National Health Investors, Inc. stock logo
NHI
National Health Investors
$52.79
+2.3%
6.82%$3.60-6.54%121.62%N/ANews Coverage
Hannon Armstrong Sustainable Infrastructure Capital, Inc. stock logo
HASI
Hannon Armstrong Sustainable Infrastructure Capital
$23.53
-0.6%
6.71%$1.585.13%63.71%N/AUpcoming Earnings
Analyst Report
News Coverage
SL Green Realty Corp. stock logo
SLG
SL Green Realty
$44.76
+4.7%
6.70%$3.000.96%N/AN/A
Global Self Storage, Inc. stock logo
SELF
Global Self Storage
$4.33
+0.5%
6.70%$0.293.71%N/AN/A
Postal Realty Trust, Inc. stock logo
PSTL
Postal Realty Trust
$14.19
-0.2%
6.69%$0.956.34%593.75%2/15/2024Dividend Increase
Positive News
Healthpeak Properties, Inc. stock logo
PEAK
Healthpeak Properties
$17.99
+0.7%
6.67%$1.20-6.75%226.42%2/13/2024News Coverage
Gaming and Leisure Properties, Inc. stock logo
GLPI
Gaming and Leisure Properties
$45.39
+0.2%
6.43%$2.925.07%101.39%N/AAnalyst Report
News Coverage
Saul Centers, Inc. stock logo
BFS
Saul Centers
$38.00
+2.0%
6.21%$2.363.64%N/AN/ANegative News
Kilroy Realty Co. stock logo
KRC
Kilroy Realty
$34.97
+1.9%
6.18%$2.163.12%129.34%N/ANews Coverage
BRT Apartments Corp. stock logo
BRT
BRT Apartments
$16.33
-0.2%
6.12%$1.004.35%N/AN/A
National Storage Affiliates Trust stock logo
NSA
National Storage Affiliates Trust
$37.03
+0.9%
6.05%$2.2418.21%287.18%N/APositive News
Boston Properties, Inc. stock logo
BXP
Boston Properties
$65.07
+2.0%
6.02%$3.92N/A192.16%N/AAnalyst Revision
NexPoint Residential Trust, Inc. stock logo
NXRT
NexPoint Residential Trust
$30.71
+0.1%
6.02%$1.8510.44%N/AN/A
Four Corners Property Trust, Inc. stock logo
FCPT
Four Corners Property Trust
$22.95
+0.2%
6.01%$1.38-3.89%124.32%N/AUpcoming Earnings
Positive News
Peakstone Realty Trust stock logo
PKST
Peakstone Realty Trust
$15.00
+5.3%
6.00%$0.90N/A85.71%N/A
Apple Hospitality REIT, Inc. stock logo
APLE
Apple Hospitality REIT
$16.07
+0.8%
5.98%$0.9647.36%107.87%N/A
American Assets Trust, Inc. stock logo
AAT
American Assets Trust
$22.19
+2.7%
5.95%$1.329.70%160.98%3/6/2024Dividend Increase
News Coverage
Crown Castle Inc. stock logo
CCI
Crown Castle
$107.47
+0.6%
5.82%$6.268.29%246.46%N/APositive News
Realty Income Co. stock logo
O
Realty Income
$53.16
-0.4%
5.79%$3.082.98%226.47%N/AAnalyst Upgrade
LXP Industrial Trust stock logo
LXP
LXP Industrial Trust
$9.03
+2.5%
5.76%$0.526.13%N/AN/AUpcoming Earnings
Positive News
NNN REIT, Inc. stock logo
NNN
NNN REIT
$39.86
-0.3%
5.67%$2.2610.53%111.88%N/ANews Coverage
W. P. Carey Inc. stock logo
WPC
W. P. Carey
$61.34
+0.7%
5.61%$3.44-0.85%150.22%N/AUpcoming Earnings
VICI Properties Inc. stock logo
VICI
VICI Properties
$29.67
-0.1%
5.60%$1.668.66%59.71%N/APositive News
Cousins Properties Incorporated stock logo
CUZ
Cousins Properties
$22.90
+4.2%
5.59%$1.282.46%272.34%N/AEarnings Report
News Coverage
High Trading Volume
Apartment Income REIT Corp. stock logo
AIRC
Apartment Income REIT
$32.25
-0.1%
5.58%$1.80N/A500.00%2/15/2024News Coverage
UMH Properties, Inc. stock logo
UMH
UMH Properties
$14.71
+0.8%
5.58%$0.824.43%455.56%2/14/2024Positive News
Douglas Emmett, Inc. stock logo
DEI
Douglas Emmett
$13.64
+4.2%
5.57%$0.76-12.13%N/AN/ANews Coverage
Centerspace stock logo
CSR
Centerspace
$53.78
+0.3%
5.43%$2.9260.98%N/AN/A
JBG SMITH Properties stock logo
JBGS
JBG SMITH Properties
$16.85
+3.1%
5.34%$0.90-9.14%N/AN/APositive News
CareTrust REIT, Inc. stock logo
CTRE
CareTrust REIT
$21.00
+1.7%
5.33%$1.123.85%107.69%N/ANews Coverage
Simon Property Group, Inc. stock logo
SPG
Simon Property Group
$144.10
+0.5%
5.27%$7.607.48%120.25%3/7/2024Earnings Report
Dividend Increase
Alexander & Baldwin, Inc. stock logo
ALEX
Alexander & Baldwin
$17.21
+0.9%
5.17%$0.8937.43%123.61%N/A
Agree Realty Co. stock logo
ADC
Agree Realty
$57.98
-0.3%
5.11%$2.966.67%162.64%N/AUpcoming Earnings
Elme Communities stock logo
ELME
Elme Communities
$14.41
+1.5%
5.00%$0.72N/A1,440.00%N/AUpcoming Earnings
News Coverage
COPT Defense Properties stock logo
CDP
COPT Defense Properties
$23.35
+2.0%
4.88%$1.14N/A92.68%N/ANews Coverage
Kimco Realty Corp stock logo
KIM
Kimco Realty
$20.02
-0.7%
4.80%$0.9619.87%126.32%N/A
Brixmor Property Group Inc. stock logo
BRX
Brixmor Property Group
$22.86
+1.1%
4.77%$1.0922.19%123.86%N/AUpcoming Earnings
UDR, Inc. stock logo
UDR
UDR
$35.49
+0.5%
4.73%$1.684.86%329.41%N/ANews Coverage
Lamar Advertising stock logo
LAMR
Lamar Advertising
$105.67
+1.1%
4.73%$5.0025.99%89.13%N/A
Mid-America Apartment Communities, Inc. stock logo
MAA
Mid-America Apartment Communities
$124.48
-0.6%
4.72%$5.8823.13%129.23%N/AEarnings Report
Analyst Revision
News Coverage
Essential Properties Realty Trust, Inc. stock logo
EPRT
Essential Properties Realty Trust
$24.62
+1.0%
4.63%$1.146.39%98.28%N/AUpcoming Earnings
Insider Selling
News Coverage
CubeSmart stock logo
CUBE
CubeSmart
$44.07
+0.6%
4.63%$2.0414.18%110.87%N/A
Kite Realty Group Trust stock logo
KRG
Kite Realty Group Trust
$21.64
+1.2%
4.62%$1.007.77%526.32%N/AUpcoming Earnings
Positive News
NETSTREIT Corp. stock logo
NTST
NETSTREIT
$17.85
+0.2%
4.59%$0.8259.40%341.67%N/AUpcoming Earnings
News Coverage
Vornado Realty Trust stock logo
VNO
Vornado Realty Trust
$26.41
+4.0%
4.54%$1.20-45.99%705.88%N/AUpcoming Earnings
Analyst Revision
News Coverage
Extra Space Storage Inc. stock logo
EXR
Extra Space Storage
$143.47
+0.7%
4.52%$6.4821.64%117.39%N/APositive News
Equity Residential stock logo
EQR
Equity Residential
$59.20
+0.6%
4.48%$2.653.22%153.18%N/AAnalyst Revision
Retail Opportunity Investments Corp. stock logo
ROIC
Retail Opportunity Investments
$13.75
+0.4%
4.36%$0.6044.22%187.50%N/AUpcoming Earnings
Positive News
Regency Centers Co. stock logo
REG
Regency Centers
$62.14
+0.3%
4.31%$2.683.25%115.02%N/A
Regency Centers Co. stock logo
REG
Regency Centers
$62.14
+0.3%
4.31%$2.683.25%115.02%N/A
Alexandria Real Estate Equities, Inc. stock logo
ARE
Alexandria Real Estate Equities
$117.90
+0.6%
4.31%$5.085.37%132.29%N/A
Independence Realty Trust, Inc. stock logo
IRT
Independence Realty Trust
$14.88
+0.9%
4.30%$0.644.71%182.86%N/AUpcoming Earnings
Positive News
Federal Realty Investment Trust stock logo
FRT
Federal Realty Investment Trust
$102.06
+1.2%
4.27%$4.360.94%139.30%N/AUpcoming Earnings
Positive News
Camden Property Trust stock logo
CPT
Camden Property Trust
$93.94
-0.8%
4.26%$4.006.41%240.96%3/27/2024Earnings Report
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Key Points

  • REITs are required to pay out at least 90% of their taxable income out to shareholders in the form of dividends. 
  • While high dividends can create a stream of passive income for investors, they can also increase the possibility that an asset is overvalued. 
  • High dividends over 10% may not be sustainable, and could subject investors to more risk. 
  • 5 stocks we like better than Equity Residential

A real estate investment trust (REIT) is one of the only types of companies required to pay dividends to investors to maintain specialty tax privileges. Some investors specifically look for REITs with high dividends to create a passive income stream in their portfolios. But why do REITs have high dividends, and are these investments safe for your portfolio? 

Read on to learn more about identifying good dividend REITs and how to use these investment opportunities in a way that limits your risk. 

What is a REIT?

A real estate investment trust (REIT) is a company that owns and operates or finances income-producing properties. Most REITs work relatively straightforwardly, managing commercial or residential spaces, renting them out to tenants and returning a portion of rent to shareholders in the form of dividends. Some REITs also offer property finance services, including personal and commercial mortgage loans. Congress established the REIT structure in the 1960s to provide individuals with a method to invest in large-scale property investments.  

What is a high-dividend REIT? Infographic on MarketBeat

Why Do REITs Pay High Dividends?

Many investors are attracted to high dividend REIT investment opportunities because REITs are one of the only company structures legally required to pay dividends to investors. To maintain its status as a REIT, a REIT company must pay out at least 90% of its taxable income to shareholders. The highest dividend REITs may even pay a monthly dividend to keep up with government-required investor payments.

A company that qualifies as a REIT must issue dividends to maintain this status as long as it profits. Many REITs aim to pay out more than 90% of its income to investors to compete for the title of the highest dividend REIT and attract new funds for projects. You can tell how much a REIT will pay in a dividend by examining the dividend yield and comparing it to the current share price. 

Example of a REIT

A quintessential example of a REIT, Whitestone REIT (NYSE: WSR) specializes in maintaining and operating community-centered properties in major metropolitan areas. Whitestone owns a diversified portfolio of commercial properties in densely populated areas of Texas, Arizona and Illinois. These properties typically cater to local residents and small businesses, offering a mix of retail, office and other commercial spaces.

Whitestone REIT on MarketBeat

Image: Like other high-dividend REITs, Whitestone aims to increase its dividend for as many consecutive years as possible. 

Like many other REITs, Whitestone aims to increase its dividend track record year after year. Whitestone currently has a track record of increasing its dividend for the previous two years, which does not qualify it as a dividend contender or champion. It showcases a healthy dividend yield percentage of 5.69% as of May 2023, which means that it pays out about 5.69% of the stock's share value each year. Its next dividend payment will pay out on June 13, with an estimated value of four cents. Whitestone pays a monthly dividend, which can create a consistent and predictable stream of reinvestment capital for investors.  Whitestone monthly dividends on MarketBeat

Image text: Whitestone REIT offers a monthly dividend to investors, which may encourage long-term holding among investors. 

How to Evaluate High Dividend REITs

When investing for passive income, investing all your funds in the highest dividend REITs can be tempting. While dividend yield is a key factor, it shouldn't be the only thing you consider when choosing the best dividend REITs. The following are a few additional factors to help you maximize the benefits REITs can offer you. 

Diversification

REITs expose you to the real estate asset class, which has different risk and return characteristics than traditional stocks and bonds. Including REITs in a portfolio allows investors to diversify beyond traditional asset classes and benefit from real estate's income potential and capital appreciation. If you don't have the funds to invest in real estate directly or you're looking for a more passive way to capitalize on real estate market movements, REITs can provide an ideal solution. 

You can further diversify your investment by investing in multiple real estate classes within the real estate sector. Major REITs operate in individual market sectors; these companies usually own properties around a select few states. Including multiple REIT types (for example, commercial property and healthcare property investments) can help diversify your portfolio and limit losses. 

Hedge Against Inflation

Multiple characteristics of REITs make them higher-value assets in an environment of high inflation. REITs derive a significant portion of their revenue from rental income generated by their real estate properties. As inflation occurs, the cost of living and operating expenses, including property operating expenses, tends to rise. 

In response, landlords often can increase rental rates over time to keep pace with inflation. This potential for rental income adjustments allows REITs to capture increased cash flows from their properties and maintain income growth in an inflationary environment.

Property prices and values also tend to rise when inflation is high. Many REITs own underlying, tangible real estate investments, which leads to increased share prices based on the land ownership or value of the leases issued. While these REITs may see increased capital appreciation in times of inflation, mortgage REITs may be at a higher risk of volatility. Understanding these types of REITs and diversifying the types of REITs you include in your asset mix can make dividend investing less risky.  

How to Pick the Best High Dividend REITs

Now that you understand how to evaluate REITs and some of the benefits these companies can add to your portfolio, it's time to start investigating your investment options. Here's how to select a REIT with a high dividend to add to your portfolio. 

Step 1: Consider stocks vs. ETFs.

When investing in REITs, you can purchase either individual stocks or exchange-traded funds (ETFs) that include REIT investments. ETFs are collections of stocks that trade together as a single unit throughout the day on major stock markets. Investing in an ETF over individual shares of stocks can limit your risk of loss as an investor, as these assets spread your risk among multiple companies. 

Vanguard REIT on MarketBeatImage: The Vanguard Real Estate ETF (NYSE: VNQ) is an example of a REIT ETF that provides a solid dividend. 

As you research, consider the benefits ETFs can offer over shares of stock. Both assets can provide consistent, high dividends when concentrated in the REIT sector, but ETFs manage risk by investing in multiple income-generating assets. Consider dividend yields when comparing investments and note each ETF's expense ratio when calculating anticipated returns. 

Step 2: Consider industry and sector.

Once you've found a potential investment, learn how the business operates and what types of assets it considers for its portfolio. Assess the overall economic conditions and prospects for the specific industry sector in which the REIT operates. Factors such as population growth in the area where the REIT operates and employment trends can be key factors to research when considering the REIT's growth potential. 

Pay special attention to the property types the REIT invests in and their suitability for the current market conditions. Different property types have varying risk profiles. For example, while healthcare facilities have higher operating costs than most commercial shopping centers, cutting into profits for investors, they also have higher consumer demand levels. If you aren't investing in a diversified ETF, you may want to consider investing in multiple REITs operating in different sectors. 

Step 3: Look at portfolio assets.

When investing in individual stocks, you must review the company's current portfolio of assets before investing. While examining company financials and overall sector is essential, looking at the individual operations the REIT invests in can provide a more concrete look at what you're investing in. You should be able to access your REIT's portfolio information through its website or investor reports. 

Step 4: Place a buy order and monitor your investment. 

Once you've created a watchlist of REITs and REIT investments you're considering, choose an entry point and place a buy order through your brokerage account. Monitor your investment and how it changes in value over time. As the REIT produces dividends, you'll see them automatically deposited into the brokerage account that holds your shares. 

Long-term investors may want to enable automatic dividend reinvestments, which reinvest dividends back into the issuing stock at the current market rate at the time of payment. You can also choose to take the dividend in cash. 

Are High Dividend REITs Safe?

While high dividend REITs may be legally required to offer a dividend distribution, these assets can be more volatile than other options like blue-chip investments. REITs' performances are closely tied to the performance of the real estate markets, which means that investors may be subject to losses if the market takes a negative turn. 

You can take steps to limit your risk of losses when investing in high dividend REITs. Reviewing a REIT's debt levels and interest rate exposure is crucial; high levels of debt and variable interest rates can increase the financial risk of the REIT and potentially impact its ability to maintain dividend payments. Also, pay attention to dividend yield and sustainability instead of purchasing the REITs with the highest payouts. Generally, dividend yield rates above 10% are considered riskier and less likely to be sustainable. 

Outlook for REITs 

In the past year, investors have been subject to historic inflation levels. However, a contracting circulating cash supply may indicate that the worst is behind us as the market moves toward a period of recession. REITs may be poised to perform exceptionally well in the second half of 2023 and beyond, especially as a lack of residential properties for sale further increases the cost of housing. 

Investing in Real Estate through REITs

While high dividend REITs can provide an attractive incentive to investors, it's important to remember that these payments may increase the likelihood that an asset is overvalued. Comparing debt levels and choosing investments with sustainable dividends can create a more reliable passive income stream for you as an investor. Use REITs to complement a fully diversified investment portfolio of blue-chip and growth-oriented options. 

FAQs

Before continuing your research, learn the answers to a few last-minute questions you might have about high dividend REITs and other income-generating assets. 

What is a typical dividend for a REIT? 

In March 2023, the average REIT paid a dividend yield of 3.49%. While it's possible to find REITs with yields as high as 10% or more, these payments are less sustainable and can be at a higher risk of cuts. 

What is the most profitable REIT to invest in?

The most profitable REIT at any given time will vary depending on revenue, share price and additional factors. Some of the largest REITs on the current market include Simon Property Group, Inc. (NYSE: SPG) and Equity Residential (NYSE: EQR)

Why not invest in REITs?

REIT values are highly tied to the real estate market's performance, which can be more volatile. Changes in tax laws or regulations related to REITs can also impact their ability to distribute dividends or qualify for tax benefits, reducing your returns as an investor. 

Sarah Horvath

About Sarah Horvath

  • horvath.sarah17@gmail.com

Contributing Author

Retail, Healthcare, and Real Estate stocks

Experience

Sarah Horvath has been a contributing writer for MarketBeat since 2022.

Areas of Expertise

Retirement investing, long-term retail investing, personal finance

Education

Bachelor of Arts, Arcadia University

Past Experience

Vanguard, Nationwide, Benzinga and MarketWatch

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