5 High-Dividend REITs to Buy Now
By: Ned Piplovic,
High dividend REITs offer investors an easy way to invest in the real estate market and collect a steady flow of above-average dividend income distributions.
To take advantage of tax laws that allow real estate investment trusts (REITs) to pay no corporate income taxes, REITs must distribute at least 90% of their earnings as dividends. These regulations offer an incentive, and REITs generally tend to offer high dividend yields.
REIT units trade on major exchanges, which makes REITs very convenient and easy real estate investments. Furthermore, the high liquidity of REITs allows investors to divest their stock positions easily and convert their positions into cash or other investments.
While investors seek high dividend yields, at least minimal asset appreciation must accompany the high yields to ensure positive total returns. A rising or a high dividend yield could be a result of a stock price decline. Since stocks experience a much higher degree of volatility than dividend payouts, a falling share price can easily overcome a rising dividend and deliver total losses while driving the dividend yield higher.
5 High Dividend REITs to Buy Now: #5
CorEnergy Infrastructure Trust, Inc. (NYSE:CORR)
CorEnergy Infrastructure Trust, Inc. is a real estate investment trust (REIT) that owns critical energy assets, such as pipelines and storage terminals, as well as transmission and distribution assets. CorEnergy collects revenues through long-term contracts with operators of the REIT’s assets.
The REIT’s current quarterly distribution of $0.05 converts to a $0.20 annualized payout and a 2.7% forward dividend yield. This yield and payout are considerably lower than the norm due the economic uncertainty of the last 12 months and how its negatively impacted CorEnergy Infrastructure. Since 2016, its dividend has been a much more amicable $0.75 per quarter, with an annual payout of $3.00 per share.
The REIT dropped 83% in the trailing 12 months, bringing the five-year capital returns to -28.6%. While this is ill news for those already holding CORR, it also means that the REIT is now trading at a tremendous discount. On January 13, 2021, the share price closed at $7.45.
5 High Dividend REITs to Buy Now: #4
Sabra Health Care REIT, Inc. (NASDAQ:SBRA)
Sabra Health Care operates as a REIT that owns and manages 432 health care properties, such as skilled nursing and transitional care facilities, senior housing communities, specialty hospitals and other health care facilities. Including one joint venture, the REIT’s total capacity exceeds 50,000 beds across all its facilities.
The REIT’s current $0.30 quarterly distribution corresponds to a $1.20 annual payout and a 7.0% forward dividend yield. Additionally, Sabra Health Care’s current yield is nearly double the 3.8% average yield of the entire Financial sector, as well as 80% higher than the simple average yield of the company’s peers in the Health Care Facilities REIT’s industry segment.
The REIT’s share price experienced moderate volatility, which included a 45% decline during the overall market correction near the start of 2020. However, since reversing direction in both April and November of 2020, the share price has advanced 17% and then 24%, regaining nearly all of its losses and ending the year with a loss of only 12%. When accounting for dividends, the total return was a 5% loss for investors. These investors have seen a three-year return of 23.5% and a five-year return of a healthy 37%.
5 High Dividend REITs to Buy Now: #3
Whitestone REIT (NYSE:WSR)
Whitestone is a community-centered retail REIT that owns and manages “e-commerce resistant” retail centers principally located in Phoenix, Austin, Dallas-Fort Worth, Houston and San Antonio. The REIT’s mix of national, regional and local tenants offers daily necessities, needed services and entertainment.
The company has been paying a $0.04 flat monthly payout since the market correction of March 2020. Before this, its annual payout was an even $1.08 per year since 2012, shortly after it began dividend distributions in 2010. This annual payout is equivalent to an 5.2% forward dividend yield. The current yield is considerably higher than the 3.8% average yield of the entire Financial sector and 45% higher than the yield average of the Diversified REITs industry segment.
The share price has experienced some volatility in the trailing 12 months, and has yet to fully recover from the economic turmoil of early 2020. As a result, its 1-year returns are down 34% alongside its 3-year returns, down 24.4%. Its 5-year returns, however, are still positive with a 12.6% gain.
5 High Dividend REITs to Buy Now: #2
Arbor Realty Trust, Inc. (NYSE:ABR)
The Arbor Realty Trust enhanced its annual payout 7.9% to $1.23 from the $1.14 amount in the previous year. This new dividend distribution amount is equivalent to a $0.32 quarterly payout amount and yields 9%. The current dividend yield is also higher than the company’s own 8.5% average yield over the last years.
Arbor Realty’s current 9% yield is more than double the 3.8% simple average yield of the entire Financial sector. Additionally, the REIT’s current yield is also notably above the 5.75% yield average of the company’s peers in the Diversified REITs industry segment. Furthermore, Arbor Realty’s current yield also outperforms the 7.8% simple average yield of the segment’s only dividend-paying equities.
In addition to a steady dividend income, Arbor Realty has rewarded its shareholders with robust asset appreciation. Over the trailing 12 months, the company has delivered a total return of nearly 19%. Additionally, the shareholders more than doubled their investment over the past three years with a total return of 125.1%. Furthermore, total returns over the last five years are over 241%.
5 High Dividend REITs to Buy Now: #1
Ellington Financial, Inc. (NYSE:EFC)
Founded in 2007 and based in Old Greenwich, Connecticut, Ellington Financial, Inc. acquires and manages residential mortgage-backed securities backed by consumer and government-backed loans. The company also provides collateralized loan obligations, mortgage-related and non-mortgage-related derivatives, equity investments in mortgage originators and other strategic investments. Ellington Financial switched to operating as a REIT in January 2019.
The company’s current $0.10 monthly dividend distribution corresponds to a $1.20 annualized payout and a 7.9% forward dividend yield. The REIT cut its dividend by nearly 50% shortly after March 2020, and has been steadily increasing it again month-by-month since.
Despite the necessity of dividend cuts, the total return of the company over the trailing 12 months was down only 0.3%. In the trailing three years, its share price has grown 39.7%, and in the last five, an impressive 57.7%.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.